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April 26, 2007
Management Integration between Doutor Coffee and Nippon Restaurant System
Management Integration between Doutor Coffee and Nippon Restaurant System
Doutor Coffee Co., Ltd. Nippon Restaurant System Inc.
2
Contents
1. Background of the Management Integration 2. Purpose of the Management Integration3. Basic Management Policies for the Integration4. Company Descriptions5. Positioning in the Restaurant Industry after the Integration6. Management Objectives7. Strategies for the Holding Company8. Synergies anticipated from the Management Integration9. Schedule for the Stock-Transfer10. Structure of the Management Integration11. Outline of the Holding Company12. Directors and Auditors13. Time Schedule for the Integration
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１．Background of the Management Integration
Changing environments surrounding the two companiesChanging environments surrounding the two companies
Declining size of the domestic marketCompanies from other sectors and foreign companies entering the marketReorganization of the industry and increased number of mergers and acquisitions
Declining size of the domestic marketCompanies from other sectors and foreign companies entering the marketReorganization of the industry and increased number of mergers and acquisitions
Increased awareness for safety and healthConsumers becoming more and more selective Increased preference for convenience
Increased awareness for safety and healthConsumers becoming more and more selective Increased preference for convenience
Aging and declining populationChanges in the population structure Widening gap between social classes
Aging and declining populationChanges in the population structure Widening gap between social classes
Situation of the restaurant industry
Consumer trends Social and economic situations
New values to be created by the integration of Doutor Coffee and Nippon Restaurant System, two strong companies in the areas of “drinking” and “eating”
New values to be created by the integration of Doutor Coffee andNew values to be created by the integration of Doutor Coffee and Nippon Nippon Restaurant System, two strong companies in the areas of Restaurant System, two strong companies in the areas of ““drinkingdrinking”” and and ““eatingeating””
Only a small number of companies with high competitiveness can sOnly a small number of companies with high competitiveness can surviveurvive
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2. Purpose of the Management Integration
Meeting the diversified expectations of the consumersMeeting the diversified expectations of the consumers
Promoting innovative shop development through synergy effects brought about by the combination of business development capabilities and store development capabilities
Promoting innovative shop development through synergy effects brought about by the combination of business development capabilities and store development capabilities
Becoming an “Excellent Leading Company” in the
Japanese restaurant industry
Becoming an Becoming an ““Excellent Leading CompanyExcellent Leading Company”” in the in the
Japanese restaurant industryJapanese restaurant industry
Maximizing the enterprise value as a groupMaximizing the enterprise value as a group
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Field work is the highest priorityServing our customers is the basics of all
Field work is the highest priorityField work is the highest priorityServing our customers is the basics of allServing our customers is the basics of all
3. Basic Management Policies for the Integration
Mutual respect between the two companies and treating each company equally
Mutual respect between the two companies and treating each Mutual respect between the two companies and treating each company equallycompany equally
Creating a corporate culture that is open and challengingCreating a corporate culture that is open and challengingCreating a corporate culture that is open and challenging
Active communication among employeesActive communication among employeesActive communication among employees
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Doutor CoffeeDoutor Coffee Nippon Restaurant SystemNippon Restaurant System
Fiscal TermFiscal Term March 2007March 2007 May 2006May 2006
SalesSales 68.6 billion yen68.6 billion yen
4. Company Descriptions (1/2)
Ordinary IncomeOrdinary Income 4.7 billion yen4.7 billion yen
Ratio of Ordinary Income to Sales
Ratio of Ordinary Income to Sales 6.8 ％6.8 ％
Total AssetsTotal Assets 53.4 billion yen53.4 billion yen
Number of Employees
Number of Employees 992992
Number of StoresNumber of Stores 1,4701,470
Figures after the integration(Simply added the results of
two companies)
Figures after the integration(Simply added the results of
two companies)
27.8 billion yen27.8 billion yen
5.9 billion yen5.9 billion yen
21.1％21.1％
34 billion yen34 billion yen
753753
318318
Number of Store Formats
Number of Store Formats 66
Main FormatMain Format Doutor Coffee ShopDoutor Coffee Shop
3434
Youmenya GoemonYoumenya Goemon
96.4 billion yen96.4 billion yen
10.6 billion yen10.6 billion yen
11.0%11.0%
87.4 billion yen87.4 billion yen
1,7451,745
1,7881,788
4040
“Drinking” & “Eating”“Drinking” & “Eating”
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4. Company Descriptions (2/2)
Doutor CoffeeDoutor Coffee Nippon Restaurant SystemNippon Restaurant System
A leading company in the café industry
Store development capability using franchise system• Accumulated know-how to manage franchise
stores
Self-contained business model• Maintains the quality of the products by completing
the procurement and roasting process on its own
Strong brand recognition in Japan• Doutor Coffee has sales network throughout
Japan, and the number of people who use Doutor Coffee Shop has reached as many as 220 million per year
A leading company in the cafA leading company in the caféé industryindustry
Store development capability using franchise system• Accumulated know-how to manage franchise
stores
Self-contained business model• Maintains the quality of the products by completing
the procurement and roasting process on its own
Strong brand recognition in Japan• Doutor Coffee has sales network throughout
Japan, and the number of people who use Doutor Coffee Shop has reached as many as 220 million per year
Highly profitable management by accumulated know-how of restaurant business
Brand development capability• Multiple brand development having Youmenya
Goemon as the core brand
Self-contained system• Has the self-contained system where it carries out
procurement, processing and distribution of food, and designing and maintenance of stores on its own
Selective locations of stores• The stores are located in large cities with the
population higher than 1 million, and near the train stations
Highly profitable management by accumulated Highly profitable management by accumulated knowknow--how of restaurant businesshow of restaurant business
Brand development capability• Multiple brand development having Youmenya
Goemon as the core brand
Self-contained system• Has the self-contained system where it carries out
procurement, processing and distribution of food, and designing and maintenance of stores on its own
Selective locations of stores• The stores are located in large cities with the
population higher than 1 million, and near the train stations
Sharing management
resources and know-how
Sharing Sharing management management
resources and resources and knowknow--howhow
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5. Positioning in the Restaurant Industry after the Integration
Sales（FY2005）
Number of stores（FY2005）
Ordinary Income（FY2005）
4,498
5,009
5,009
5,014
5,165
5,392
6,370
10,532
10,557
15,760
0 5,000 10,000 15,000 20,000
SAIZERIYA
OHSHO FOODSERVICE
SAINT MARCHOLDINGS
ROYALHOLDINGS
NIPPON RESTAURANTSYSTEM
DOUTOR COFFEE
REXHOLDINGS
ZENSHO
NEW COMPANY
PLENUS
80,741
82,671
92,653
93,064
101,533
120,926
122,386
148,373
149,258
325,655
0 100,000 200,000 300,000 400,000
DAISYO
WATAMI
NEW COMPANY
COLOWIDE
ROYALHOLDINGS
PLENUS
YOSHINOYAD&C
REX HOLDINGS
ZENSHO
MCDONALD'SHOLDINGS
1,010
1,061
1,137
1,424
1,425
1,472
1,501
1,707
2,390
3,802
0 1,000 2,000 3,000 4,000
ICHIBANYA
HURXLEY
KOZOSUSHI
DOUTOR COFFEE
REXHOLDINGS
MOS FOOD
KENTUCKY FRIEDCHICKEN JAPAN
NEW COMPANY
PLENUS
MCDONALD'SHOLDINGS
SO-HONBU
SERVICES
（stores）
Source：Financial reports (FY2005) of listed companies classified as “Restaurants” by NOMURA Sector Classification SystemNote：”NEW COMPANY” represents the sum of “DOUTOR COFFEE” and “NIPPON RESTAURANT SYSTEM”
（million yen）（million yen）
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6. Management Objectives
Aiming to become an “Excellent Leading Company”in the Japanese restaurant industry
Aiming to become an Aiming to become an ““Excellent Leading CompanyExcellent Leading Company””in the Japanese restaurant industryin the Japanese restaurant industry
Expected Mid-Term Goals (FYE Feb 2011)Sales 110 billion yen – 120 billion yenOrdinary Income 14 billion yen – 15 billion yen
The three-year business plan after the integration is expected to be completed before March 2008.
Expected Mid-Term Goals (FYE Feb 2011)Sales 110 billion yen – 120 billion yenOrdinary Income 14 billion yen – 15 billion yen
The three-year business plan after the integration is expected to be completed before March 2008.
Creation of “active investment” opportunities for further growthCreation of “active investment” opportunities for further growth
Establishment of restaurant industry as a “system industry”Establishment of restaurant industry as a “system industry”
Aiming for overseas opportunities as a “Japanese Brand”Aiming for overseas opportunities as a “Japanese Brand”
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7. Strategies for the Holding Company
Store development taking advantage of synergies brought about bythe combination of business development capability and franchise
know-how
Store development taking advantage of synergies brought about bythe combination of business development capability and franchise
know-how
Restructuring of existing brands by sharing the two companies’know-how
Restructuring of existing brands by sharing the two companies’know-how
Development of a new business model by the combination of “drinking” and “eating”
Development of a new business model by the combination of “drinking” and “eating”
““MultiMulti--Brand StrategiesBrand Strategies””Enhance profitability (offense) and avoid risk (defense) in Enhance profitability (offense) and avoid risk (defense) in
order to realize stable business operationsorder to realize stable business operations
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(Reference) Multi-Brand Strategies
Lifecycles of brandsLifecycles of brands
<Growing phase><Growing phase> <Establishment phase><Establishment phase>
<Developmental phase><Developmental phase> <Transition phase><Transition phase>
New Format
NewModel
InnovativeShop
Development
Restructuring of brands
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8. Synergies anticipated from the Management Integration
New Business Development
New Business Development
Store Development
Store Development
Store Operation
Store Operation
Product Related
Product Related
• New format development• New business model development
– Suburban model, Complex model
• New format development• New business model development
– Suburban model, Complex model
Ordinary Income of 2 - 4 billion
yen
Ordinary Ordinary Income of Income of 2 2 -- 4 billion 4 billion
yenyen
Expected Synergy Effect
as of FYE February 2011
• Expansion of store locations (1st floor, 2nd floor, basement, road surface)
• Sharing of information regarding properties• Restructuring of underperforming stores
• Expansion of store locations (1st floor, 2nd floor, basement, road surface)
• Sharing of information regarding properties• Restructuring of underperforming stores
• Develop franchisees to open formats which used to operate only in directly-operated-shops
• Sharing of operational know-how
• Develop franchisees to open formats which used to operate only in directly-operated-shops
• Sharing of operational know-how
• Cooperative development of products• Cooperative procurement of ingredients• Sharing of logistics centers
• Cooperative development of products• Cooperative procurement of ingredients• Sharing of logistics centers
• Sharing of indirect functions• Enhancement of human resources (recruiting as a
new group, sharing training programs) • Centralization of management through system
integration
• Sharing of indirect functions• Enhancement of human resources (recruiting as a
new group, sharing training programs) • Centralization of management through system
integration
Control FunctionsControl
Functions
Gro
wth
Syn
ergi
es
Cos
t Syn
ergi
es
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9. Schedule for the Stock-Transfer
Date of listing of the Holding CompanyOctober 1, 2007 (planned)
Effective date of the Stock-Transfer (Date of registration of incorporation of the Holding Company)
October 1, 2007 (planned)
Shareholders meetings to approve the Stock-Transfer Plan (both companies).
June 28, 2007 (planned)
Board of Directors meetings to approve the Definitive Agreement and the Stock-Transfer Plan (both companies).
Late May, 2007 (planned)
Execution of the Basic Agreement (both companies).April 26, 2007
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10. Structure of the Management Integration
• Jointly incorporate a Holding Company on October 1, 2007 by means of stock-transfer• Stock-Transfer Ratio; Doutor Coffee 1 : Nippon Restaurant System1.687
DoutorShareholders
DoutorShareholders
DoutorDoutor
NRSShareholders
NRSShareholders
NRSNRS
DoutorDoutor NRSNRS
Holding CompanyHolding Company
Holding Company
SharesDoutor Shares
NRS Shares
DoutorDoutor NRSNRS
3. After Stock-Transfer
3. After Stock-Transfer
Holding CompanyHolding Company
2. Stock-Transfer2. Stock-Transfer1. Current Situation1. Current Situation
DoutorShareholders
DoutorShareholders
NRSShareholders
NRSShareholders
Holding Company
Shares
DoutorShareholders
DoutorShareholders
NRSShareholders
NRSShareholders
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11. Outline of the Holding Company
NameName
Location of head officeLocation of head office
Expected date of incorporation
Expected date of incorporation
Doutor Nichires Holdings Inc.（Tentative name, TBD）Doutor Nichires Holdings Inc.（Tentative name, TBD）
NRS Bldg., 10-11, Sarugaku-cho, Shibuya-ku, TokyoNRS Bldg., 10-11, Sarugaku-cho, Shibuya-ku, Tokyo
October 1, 2007 (planned)October 1, 2007 (planned)
Account SettlementAccount Settlement
Stock ExchangeStock Exchange
End of FebruaryEnd of February
Tokyo Stock ExchangeTokyo Stock Exchange
ChairmanChairman
PresidentPresident
Hirofumi Ohbayashi（Chairman, Nippon Restaurant System Inc.）Hirofumi Ohbayashi（Chairman, Nippon Restaurant System Inc.）
Yutaka Toriba（President, Doutor Coffee Co., Ltd.）Yutaka Toriba（President, Doutor Coffee Co., Ltd.）
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12. Directors and Auditors
Board of Directors (Current Positions)• Chairman Hirofumi Ohbayashi （Chairman, Nippon Restaurant System Inc.）• President Yutaka Toriba （President, Doutor Coffee Co., Ltd.）• Director Minoru Yamauchi （President, Nippon Restaurant System Inc.）• Director Masanori Hoshino （Vice President, Doutor Coffee Co., Ltd.）• Director Rokuro Inamori （Managing Director, Doutor Coffee Co., Ltd.）• Director Takafumi Kidaka （Director, Nippon Restaurant System Inc.）
Auditors• 2 full time auditors will be appointed upon consultation of both companies• 2 external auditors will be appointed upon consultation of both companies
Mr. Hiromichi Toriba, the current Honorary Chairman of Doutor Coffee is expected to be appointed the Honorary Chairman of the Holding Company.
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13. Time Schedule for the Integration
07.4 07.6 07.10 10.2 11.208.2 09.2
Accelerated growthAccelerated Accelerated growthgrowth
Early realization of synergy effects of the integration
• Promotion of integration led by study groups• Consolidation of basis for growth
Early realization of synergy Early realization of synergy effects of the integrationeffects of the integration
• Promotion of integration led by study groups• Consolidation of basis for growth
Promotion of the Group’s 3-year business plan
Promotion of the Group’s 3-year business plan
A preparation committee to be set up
Inco
rpor
atio
n of
the
Hol
ding
Com
pany
Inco
rpor
atio
n of
the
Hol
ding
Com
pany
Basi
c Ag
reem
ent
App
rova
l of t
he
shar
ehol
ders
’mee
ting
18
This material contains forward-looking statements that involve risks and uncertainties. The plans, forecasts, and strategies pertaining to future business profitability stated in this document are based on judgments by the management of this group that have been obtained from currently available data. Accordingly, we ask that you make no investment decisions that rely solely on these business forecasts. Please understand that, due to a number of important factors, actual performance may produce results that differ significantly from these business forecasts.The information and opinions contained in this material have been obtained from sources believed to be reliable, but no representations or warranties, express or implied, are made that such information is accurate or complete and no responsibility or liability can be accepted for errors or omissions or for any losses arising from the use of this material.
This material contains forward-looking statements that involve risks and uncertainties. The plans, forecasts, and strategies pertaining to future business profitability stated in this document are based on judgments by the management of this group that have been obtained from currently available data. Accordingly, we ask that you make no investment decisions that rely solely on these business forecasts. Please understand that, due to a number of important factors, actual performance may produce results that differ significantly from these business forecasts.The information and opinions contained in this material have been obtained from sources believed to be reliable, but no representations or warranties, express or implied, are made that such information is accurate or complete and no responsibility or liability can be accepted for errors or omissions or for any losses arising from the use of this material.
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