Food & Life Cos. (3563)

Equity Research 18 September 2026 | 8:37PM JST

Food & Life Cos. (3563.T): Briefing on recent share price: Confirms no signs of slowdown in China; Buy

Food & Life held a briefing with sell-side analysts after the market close on Sho Kawano | September 18. The key points are as follows. Goldman Sachs Japan Co., Ltd.

n The company cited three main factors behind the share price decline (-18%) over Tomoko Imoto | the past two weeks: (1) not being selected as a constituent of the Nikkei 225 Goldman Sachs Japan Co., Ltd. (announced on September 4); (2) market concerns over the possibility that Xiao Zhang FY9/27 guidance, scheduled to be announced in November, will be conservative | Goldman Sachs Japan Co., Ltd. as in the past; and (3) a plateauing of margins. Regarding (2), the company’s Chie Hu policy is to not be overly conservative and to present realistic and achievable | Goldman Sachs Japan Co., Ltd. figures. Regarding (3), Food & Life explained that this is associated with strategic groundwork for business expansion, and it remains committed to maintaining or improving the companywide operating margin (including overseas) over the course of the next medium-term plan. n Food & Life said that news reports suggesting a slowdown in same-store customer traffic in China or the number of waiting parties aggregated via GPS and other means are not accurate, and looking at actual figures for August and the first half of September, it sees no sense of a slowdown. In addition, in response to reputational damage regarding hygiene at a Beijing store (early September), the company explained it is taking measures such as obtaining consent from customers on touch panels when ordering that they will not engage in nuisance behavior, as well as increasing the frequency of staff patrols, and that it has not seen any impact on earnings at this point. n It re-confirmed that the impact of rising tuna prices is being fully absorbed by the July price hikes.

Our view: We take a positive view of the company moving to respond to market concerns in a timely manner. The company commented that momentum in China remains strong, including at thriving stores in Tier 1 cities. We also note that (1) the number of Rednote followers (September 8 report), which has shown a high correlation with quarterly sales in mainland China to date, has continued to grow recently, and (2) experimental measures are being implemented to boost sales per store. Measures include expanding the number of stores offering delivery (planned new rollout at 15 stores in Beijing, Suzhou, and Hangzhou in August-September) and introducing value sets limited to off-peak hours in the afternoon. We forecast mainland China sales of over ¥25 bn (over 2.4X yoy) in 4Q9/26, ¥78.7 bn (2.7X yoy)

Goldman Sachs does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. For Reg AC certification and other important disclosures, see the Disclosure Appendix, or go to Analysts employed by non-US affiliates are not registered/qualified as research analysts with FINRA in the U.S.

Goldman Sachs Food & Life Cos. (3563.T)

in FY9/26, ¥128.5 bn (+63% yoy) in FY9/27, and ¥179.0 bn (+39% yoy) for FY9/28. We think annual sales per store can be maintained at a high level of over ¥700 mn from FY9/27 onward. Following the recent share price correction, the stock looks even more undervalued than before (28X P/E based on our FY9/27 estimates), and we see this as a good buying opportunity.

Price Target Risks and Methodology - Food & Life Cos. Our 12-month target price is ¥6,300. We apply the median FY26E EV/EBITDA multiple for 20 global restaurant companies to our FY9/27E estimates. Risks include staff development failing to keep pace with accelerated store openings, the sushi boom fading in Hong Kong, a greater-than-expected economic slowdown in mainland China/Southeast Asia, an unexpected surge in raw material prices, and incidental events.

3563.T 12m Price Target: ¥6,300 Price…