Synchro Food 3963

シンクロ・フード

Recent Updates

2022-05-13

Full-year FY03/22 flash update

2022-05-02

Revision to the earnings forecast

2022-05-02

Revision to the earnings forecast

Get in touch

7F Ebisu South1, 1-7-8 Ebisu Minami, Shibuya-ku, Tokyo 150-0022 JAPAN

http://www.synchro-food.co.jp/

03-5768-9522

Summary

Synchro Food operates an online information-matching platform for restaurant operators in Japan. Services span all phases of restaurant operation, including preparations to open or close a restaurant. The company’s multiple websites provide free member registration for restaurant operators, real estate agents, interior contractors, foodstuff suppliers, and restaurant workers, and then matches up these members based on their respective needs. In addition, members can post ads, which generate most of Synchro Food’s revenue in the form of fees.

Interactive Media & Services

Key dates

2018-04-05

Coverage initiation

Full Report

2022-05-13

Full-year FY03/22 flash update

2022-05-13

Q3 FY03/22 flash update

2022-02-15

1H FY03/22 flash update

2021-11-15

Q1 FY03/22 flash update

2021-08-06

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Executive summary

Business overview

Synchro Food Co., Ltd. operates an online information-matching platform for restaurant operators in Japan. Services span all phases of restaurant operation, including preparations to open or close a restaurant. The company’s multiple websites provide free member registration for restaurant operators, real estate agents, interior contractors, foodstuff suppliers, and restaurant workers, and then match up these members based on their respective needs. In addition, members can post ads, which generate most of Synchro Food’s revenue in the form of fees. As of FY03/21, the company group comprised Synchro Food (parent), which operates an online media business targeting restaurants, and consolidated subsidiaries including Wit Co., Ltd., which operates an M&A intermediary business specializing in the restaurant industry.

The company had one reporting segment, Online Media, which was divided into two service categories covering different parts of the restaurant life cycle: Operating Services (70–80% of revenue) and Opening/Closing Services (15–20% of revenue). Due to the increase in number of consolidated subsidiaries, however, the company has started to report results based on three reporting segments from Q1 FY03/21. The Media Platform business is centered on the parent company’s above-mentioned Operating Services business and generates revenue by connecting member restaurant operators, suppliers and jobseekers. The bulk of revenue in this business comes from recruiting ads for full- and part-time staff. The M&A Intermediary business is focused primarily on the parent company’s above-mentioned Opening/Closing Services which generates revenue from ads by realtors and interior contractors targeting operators who are planning to open or close a restaurant. It also includes the M&A intermediary business of Wit Co., Ltd. The Personnel Recruitment business includes the parent company’s restaurant research, ad placement and e-mail newsletter activities as well as consolidated subsidiary Synchro Career’s recruitment services for food service providers and Nicoshigoto Co., Ltd., a part-time work opportunities service (following the merger of Synchro Career into the parent in July 2021, the Personnel Recruitment business became the Other business from Q2 FY03/22). The breakdown of revenue (JPY1.2bn) for FY03/21 was Media Platform business (87.7%), M&A Intermediary business (8.1%), and Personnel Recruitment business (4.2%).

The company has three types of paid services. The first type is ads from restaurant operators and suppliers. The second type breaks down into success fees from suppliers, and commissions from buyers or sellers (depending on the type of transaction) for facilitating the sale of furniture and fixtures or restaurant acquisitions. The third type involves online sales of kitchen equipment. The company decides which fee model to apply based on the registered member’s needs, scale of business, and operating environment.

Trends and outlook

In FY03/22, the company reported full-year consolidated revenue of JPY2.0bn (+64.8% YoY), operating profit of JPY451mn (vs. operating loss of JP169mn in FY03/21), recurring profit of JPY453mn (vs. recurring loss of JPY156mn in FY03/21), and net income of JPY340mn (vs. net loss of JPY178mn in FY03/21). There were 236,255 registered members (+14.4% YoY) and 11,083 fee-paying members (+38.9% YoY); revenue per fee-paying member averaged JPY129,645 (+36.9% YoY). By service category, revenue from Operating Services stood at JPY1.4bnn (+87.2% YoY), Opening/Closing Services at JPY352mn (+22.8% YoY), and Other Services at JPY174mn (+27.1% YoY). Performance of the company’s mainstay job posting services (Media Platform business) was lackluster, particularly in 1H, because of the spread of COVID-19. The company, however, posted an increase in revenue for the full-year, as demand for recruitment recovered in 2H with the assumption of ending of the pandemic. Performance recovery in 2H compensated fixed costs and the company recorded operating profit.

The company's forecast for full-year FY03/23 calls for revenue of JPY2.3bn (+17.4% YoY), operating profit of JPY470mn (+4.3% YoY), recurring profit of JPY470mn (+3.8% YoY), and net income attributable to owners of the parent of JPY340mn (+0.1% YoY). As stated in the new medium-term management plan announced at the time of the FY03/22 earnings announcement, the company will focus on strengthening and expanding existing core businesses going forward through the nationwide roll-out of its job ad service and expansion of its platform service, as well as expanding into new business areas through the promotion and expansion of mobility services and the roll-out of data services leveraging the member base. Looking ahead to achieving the targets laid out in the new medium-term management plan, the company plans to make strategic investments into strengthening its structure through the recruitment of more engineers, directors and sales personnel, and expanding its network.

During the COVID-19 pandemic, the company reviewed its basic policy and business strategies for the future, and it announced its next business strategies in the new medium-term management plan. In FY03/25-, the final year of the management plan, the company targets revenue of JPY3.0bn, operating profit of JPY750mn, an OPM of 25.0%, recurring profit of JPY750mn, and net income of JPY532mn.

Strengths and weaknesses

Shared Research thinks the company’s strengths are: convenient end-to-end platform offering comprehensive information related to restaurant operation; competitive pricing for help-wanted ads; and high registration rates of restaurant operators in its service areas. Its weaknesses are: low barriers to entry for individual services; jobseeker registry ill-suited to restaurants aiming to keep costs low; and earnings structure skewed toward job posting revenue (see Strengths and weaknesses section for details).

Key financial data

Income statement		FY03/13	FY03/14	FY03/15	FY03/16	FY03/17	FY03/18	FY03/19	FY03/20	FY03/21	FY03/22	FY03/23
(JPYmn)		Parent	Parent	Parent	Parent	Parent	Cons.	Cons.	Cons.	Cons.	Cons.	Cons. Est.
Revenue		497	553	650	849	1,052	1,377	1,788	2,015	1,189	1,958	2,300
	YoY	-	11.4%	17.5%	30.7%	23.9%	30.9%	29.8%	12.7%	-41.0%	64.8%	17.4%
Gross profit		-	-	-	753	958	1,234	1,582	1,752	963	1,689
	YoY	-	-	-	-	27.3%	28.8%	28.2%	10.8%	-45.0%	75.4%
	Gross profit margin	-	-	-	88.7%	91.0%	89.6%	88.5%	87.0%	81.0%	86.2%
Operating profit		-	-	-	321	451	595	688	558	-169	451	470
	YoY	-	-	-	-	40.5%	32.1%	15.5%	-18.9%	-130.3%	-366.5%	4.3%
	Operating profit margin	-	-	-	37.8%	42.8%	43.2%	38.5%	27.7%	-14.2%	23.0%	20.4%
Recurring profit		79	128	188	323	423	570	687	557	-156	453	470
	YoY	-	62.5%	46.9%	71.9%	31.1%	34.7%	20.5%	-18.9%	-128.1%	-389.4%	3.8%
	Recurring profit margin	15.9%	23.1%	28.9%	38.0%	40.2%	41.4%	38.4%	27.7%	-13.2%	23.1%	20.4%
Net income		49	79	124	210	265	364	439	287	-178	340	340
	YoY	-	61.7%	57.8%	68.8%	26.1%	37.6%	20.5%	-34.5%	-161.9%	-291.1%	0.1%
	Net margin	9.8%	14.2%	19.1%	24.7%	25.1%	26.4%	24.5%	14.3%	-	17.3%	14.8%
Per-share data (JPY)
No. of shares outstanding at end of period('000 shares)		0.2	0.2	0.2	240	2,905	8,867	26,861	26,894	26,894	26,894	-
EPS		2.3	3.6	5.8	9.7	11.1	13.9	16.4	10.8	-6.7	12.8	12.8
EPS (fully diluted)		-	-	-	-	10.8	13.5	16.3	10.8	-	-	-
Dividend per share		0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0	0.0
Book value per share		6.4	30.1	47.4	76.5	205.5	81.3	90.5	101.8	94.4	107.9	-
Balance sheet (JPYmn)
	Cash and cash equivalents	-	-	-	650	1,949	2,224	2,371	2,709	2,338	3,088
Total current assets		-	-	-	720	2,022	2,321	2,487	2,790	2,556	3,217
Tangible fixed assets		-	-	-	14	11	21	36	55	48	43
Investments and other assets		-	-	-	41	60	89	209	216	125	141
Intangible assets		-	-	-	2	0	130	104	37	3	1
Total assets		230	377	485	776	2,093	2,562	2,836	3,099	2,732	3,403
	Accounts payable	-	-	-	8	5	5	5	4	5	13
	Short-term debt	-	-	-	0	0	2	2	1	0	0
Total current liabilities		-	-	-	218	295	387	410	364	204	518
	Long-term debt	-	-	-	0	0	3	1	0	0	0
Total fixed liabilities		-	-	-	7	7	12	21	23	23	14
Total liabilities		92	161	144	226	303	399	431	387	227	532
Total net assets		138	217	341	551	1,791	2,163	2,406	2,712	2,505	2,871
Total liabilities and net assets		230	377	485	776	2,093	2,562	2,836	3,099	2,732	3,403
Total interest-bearing debt		-	-	-	0	0	5	3	1	0	0
Cash flow statement(JPYmn)
Cash flows from operating activities		-	-	119	261	370	444	450	398	-406	744
Cash flows from investing activities		-	-	-13	-5	8	-153	-103	-67	-28	120
Cash flows from financing activities		-	-	-	-	949	-17	-199	7	-51	0
Financial ratios
ROA (RP-based)		41.8%	42.1%	43.6%	51.2%	29.5%	24.5%	25.5%	18.8%	-5.4%	14.8%
ROE		42.9%	44.4%	44.6%	47.1%	22.6%	18.4%	19.2%	11.2%	-6.8%	12.6%
Equity ratio		59.9%	57.4%	70.3%	70.9%	85.5%	84.4%	84.8%	87.5%	91.7%	84.3%

Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.
Note: The company adopted consolidated accounting from FY03/18, so YoY figures show comparison with FY03/17 results for the parent.

Recent updates

Revision to the earnings forecast

2022-05-02

On April 28, 2022, Synchro Food Co., Ltd. announced a revision to its full-year earnings forecast.

Revision to the company's full-year FY3/22 earnings forecast (out April 28, 2022)

Revenue: JPY2.0bn (previous forecast: JPY1.8bn)
Operating profit: JPY445mn (JPY351mn)
Recurring profit: JPY447mn (JPY351mn)
Net income attributable to owners of the parent: JPY333mn (JPY234mn)
EPS: JPY12.56 (JPY8.80)

Reasons for the revision

The lifting of the nationwide COVID-19 quasi-state of emergency in January 2022 has led to a significant increase in job posting service, boosting revenue, operating profit, recurring profit, and net income, all of which exceeded the previous forecasts. Further, following the after-hours share sale on February 25, 2022, the company is no longer classified as a family business. This resulted in a reduced tax burden, leading to a better than expected outcome for net income.

Dissolution and liquidation of a consolidated subsidiary

2022-02-15

On February 14, 2022, Synchro Food Co., Ltd. announced the dissolution and liquidation of a consolidated subsidiary.

The company announced that at a meeting of the Board of Directors held on the same date, it decided to dissolve and liquidate Nicoshigoto Co., Ltd., a consolidated subsidiary.

This resolution was reached in the backdrop of extended impact from the COVID-19 pandemic on Nicoshigoto’s bridal business, as the future remains unpredictable, and because the company is re-examining its business portfolio in the process of creating its medium-term plan for the period starting in FY03/23. Impact on the company’s consolidated results from this dissolution and liquidation is minimal.

Trends and outlook

Quarterly trends and results

Cumulative		FY03/20				FY03/21				FY03/22				FY03/22
(JPYmn)		Q1	Q1–Q2	Q1–Q3	Q1–Q4	Q1	Q1–Q2	Q1–Q3	Q1–Q4	Q1	Q1–Q2	Q1–Q3	Q1–Q4	% of Est.	FY Est.
Revenue		489	984	1,525	2,015	227	503	857	1,189	370	794	1,366	1,958	100.2%	1,955
	YoY	14.3%	19.1%	18.6%	12.7%	-53.6%	-48.9%	-43.8%	-41.0%	63.2%	57.8%	59.3%	64.8%		64.5%
Gross profit		424	842	1,313	1,752	170	393	695	963	315	679	1,171	1,689
	YoY	10.0%	16.3%	16.3%	10.8%	-60.0%	-53.3%	-47.1%	-45.0%	85.4%	72.8%	68.5%	75.4%
	Gross profit margin	86.8%	85.5%	86.1%	87.0%	74.9%	78.1%	81.1%	81.0%	85.1%	85.5%	85.7%	86.2%
SG&A expenses		305	596	897	1,195	299	587	869	1,132	290	579	896	1,238
	YoY	45.4%	39.6%	36.9%	33.6%	-2.0%	-1.5%	-3.1%	-5.2%	-2.8%	-1.5%	3.1%	9.4%
	SG&A ratio	62.3%	60.6%	58.8%	59.3%	131.7%	116.8%	101.4%	95.2%	78.4%	72.9%	65.6%	63.2%
Operating profit		120	245	417	558	-129	-195	-174	-169	25	100	275	451	101.3%	445
	YoY	-32.1%	-17.3%	-12.2%	-18.9%	-	-	-	-	-	-	-	-		-
	Operating profit margin	24.5%	24.9%	27.3%	27.7%	-	-	-	-	6.7%	12.6%	20.1%	23.0%
Recurring profit		119	245	416	557	-129	-193	-163	-156	25	101	277	453	101.3%	447
	YoY	-32.3%	-17.5%	-12.3%	-18.9%	-	-	-	-	-	-	-	-		-
	Recurring profit margin	24.4%	24.9%	27.3%	27.7%	-	-	-	-	6.7%	12.8%	20.3%	23.1%
Net income		70	136	240	287	-94	-149	-138	-178	7	74	179	340	102.0%	333
	YoY	-37.3%	-27.1%	-19.7%	-34.5%	-	-	-	-	-	-	-	-		-
	Net margin	14.4%	13.8%	15.7%	14.3%	-	-	-	-	2.0%	9.4%	13.1%	17.3%
Quarterly		FY03/20				FY03/21				FY03/22
(JPYmn)		Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
Revenue		489	495	541	490	227	276	354	331	370	424	572	592
	YoY	14.3%	24.1%	17.7%	-2.4%	-53.6%	-44.2%	-34.5%	-32.3%	63.2%	53.4%	61.5%	78.8%
Gross profit		424	417	472	439	170	223	302	268	315	364	492	517
	YoY	10.0%	23.5%	16.4%	-3.1%	-60.0%	-46.6%	-35.9%	-39.0%	85.4%	63.2%	63.0%	93.1%
	Gross profit margin	86.8%	84.2%	87.2%	89.7%	74.9%	80.7%	85.3%	80.8%	85.1%	85.9%	86.1%	87.3%
SG&A expenses		305	292	300	298	299	289	282	263	290	289	317	342
	YoY	45.4%	34.1%	31.8%	24.5%	-2.0%	-1.0%	-6.2%	-11.8%	-2.8%	0.0%	12.6%	30.1%
	SG&A ratio	62.3%	58.9%	55.5%	60.8%	131.7%	104.5%	79.5%	79.3%	78.4%	68.1%	55.5%	57.7%
Operating profit		120	125	171	141	-129	-66	20	5	25	75	175	175
	YoY	-32.1%	4.3%	-3.5%	-33.9%	-	-	-88.1%	-96.4%	-	-	759.2%	3,344.8%
	Operating profit margin	24.5%	25.3%	31.7%	28.8%	-	-	5.8%	1.5%	6.7%	17.8%	30.6%	29.6%
Recurring profit		119	125	171	141	-129	-64	30	6	25	77	176	176
	YoY	-32.3%	4.1%	-3.7%	-33.7%	-	-	-82.3%	-95.5%	-	-	477.5%	2,661.8%
	Recurring profit margin	24.4%	25.3%	31.7%	28.8%	-	-	8.6%	1.9%	6.7%	18.1%	30.7%	29.7%
Net income		70	65	104	48	-94	-55	11	-39	7	67	104	161
	YoY	-37.3%	-11.6%	-7.5%	-66.1%	-	-	-89.6%	-	-	-	867.6%	-
	Net margin	14.4%	13.2%	19.2%	9.7%	-	-	3.0%	-	2.0%	15.9%	18.2%	27.2%

Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.
Note: The company adopted consolidated accounting from Q4 FY03/18, so cumulative results for FY03/18 include three non-consolidated periods. Also, YoY figures show comparison with FY03/17 results for the parent.

Seasonality: Revenue tends to increase in Q4 (January–March)

The company’s businesses are seasonal, and Q4 revenue tends to be several percentage points higher than in other quarters, as more restaurants open in March and April and post more help-wanted ads in February and March in preparation. For example, in FY03/19 (prior to the COVID-19 pandemic), revenue in each of the first three quarters was around 24% of the annual total, but Q4 revenue was about 4pp higher at 28.0% of the total. Similarly, quarterly operating profit for the first three quarters averaged about 23% of the annual total, while Q4 was about 8pp higher at 31.1% of the total.

In addition to job postings, the company’s websites list information on properties and interior contracting aimed at operators planning to open restaurants, so the timing of booking revenue and operating profit is affected by when restaurants are opened. Q1–Q3 earnings tend to be at about the same level.

Revenue by quarter

Operating profit by quarter

Source: Shared Research based on company data
Note: Consolidated figures shown for FY03/18.

Fee-paying member count

Average spend per fee-paying member

Source: Shared Research based on company data
Note: Cumulative total for period; quarterly data are undisclosed starting in FY03/19.

Quarterly revenue by service

	FY03/17				FY03/18				FY03/19
(JPYmn)	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
Operating Services	186	193	174	225	248	263	268	288	329	292	336	371
Opening/Closing Services	45	47	52	47	52	50	52	54	70	73	94	82
Other Services	17	16	20	25	23	24	22	27	27	33	28	47
	FY03/20				FY03/21				FY03/22
(JPYmn)	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
Operating Services	385	391	368	356	140	170	244	211	250	290	437	456
Opening/Closing Services	68	68	136	78	63	76	76	71	83	93	93	82
Other Services	36	36	37	55	24	30	34	49	36	42	43	54

Source: Company data

Number of registered users and job seekers

	FY03/16				FY03/17				FY03/18
	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
Number of registered users					100,459	104,045	107,336	112,300	116,986	120,964	124,814	129,069
Job seekers	50,540	53,986	56,488	59,708	63,763	67,546	70,357	74,527	79,854	84,831	89,118	93,774
	FY03/19				FY03/20				FY03/21
	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
Number of registered users	133,665	139,230	145,301	152,321	159,780	171,520	178,078	184,497	184,497	191,019	197,909	206,432
Job seekers	100,124	106,197	111,556	117,492	124,051	131,513	138,372	147,586	157,726	174,539	183,019	189,676
	FY03/22
	Q1	Q2	Q3	Q4
Number of registered users	213,477	220,806	228,166	236,255
Job seekers	199,851	206,851	213,232	219,053

Source: Company data

Number of registered business operators

	FY03/16				FY03/17				FY03/18
	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
Number of registered business operators (Total)					2,913	3,091	3,270	3,445	3,552	3,619	3,655	3,732
Number of registered suppliers	433	528	588	638	661	765	888	970	1,031	1,040	1,047	1,073
Number of registered real estate agents	1,511	1,517	1,580	1,639	1,737	1,809	1,855	1,944	1,994	2,052	2,086	2,129
Number of registered interior design contractors	443	456	471	478	515	517	527	531	527	527	522	530
	FY03/19				FY03/20				FY03/21
	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4	Q1	Q2	Q3	Q4
Number of registered business operators (Total)	3,799	3,863	3,919	3,970	4,018	4,055	4,358	4,404	4,358	4,404	4,444	4,475
Number of registered suppliers	1,080	1,081	1,086	1,095	1,098	1,101	1,103	1,102	1,105	1,106	1,106	1,109
Number of registered real estate agents	2,184	2,236	2,281	2,332	2,383	2,427	2,487	2,534	2,733	2,769	2,801	2,829
Number of registered interior design contractors	535	546	552	543	537	527	525	525	520	529	537	537
	FY03/22
	Q1	Q2	Q3	Q4
Number of registered business operators (Total)	4,520	4,567	4,632	4,666
Number of registered suppliers	1,111	1,111	1,112
Number of registered real estate agents	2,865	2,908	2,965
Number of registered interior design contractors	544	548	555

Source: Shared Research based on company materials and interviews with the company

FY03/22 results (out May 13, 2022)

Earnings trends

Full-year FY03/22 (April 2021–March 2022) results

Revenue: JPY2.0bn (+64.8% YoY)
Operating profit: JPY451mn (vs. operating loss of JPY169mn in FY03/21)
Recurring profit: JPY453mn (vs. recurring loss of JPY156mn)
Net income*: JPY340mn (vs. net loss of JPY178mn)
*Net income/loss attributable to owners of the parent

Business environment

Although the Japanese economy showed some signs of recovery due to a temporary lull in the COVID-19 pandemic, caution is still required with regard to global economic impact from new variants and other aspects of the pandemic, as well as fluctuations in financial and capital markets. The company thinks that unpredictable conditions will continue for some time.

Company initiatives

In line with its mission of "Connecting the world of food, creating the food of the future,” the company is promoting the operation of its business based on a two-pronged strategy of addressing COVID-19 risks and preparing for future growth. The sales breakdown by service category in FY03/22 was JPY1.4bn (+87.2% YoY) in Operating Services, JPY352mn (+22.8% YoY) in Opening/Closing Services, and JPY174mn (+27.1% YoY) in Other Services.

Segment information

Starting in Q1 FY03/21, Synchro Food moved from a single reporting segment to three reporting segments.

Media Platform business

The Media Platform business comprises the services offered to restaurant operators through inshokuten.com as well as the services offered to related businesses (such as real estate agents and food suppliers) that offer their products/services via inshokuten.com. As of end-March 2022, the registered inshokuten.com member count reached 236,255 (+14.4% YoY), showing steady growth amid the lifting of the fourth state of emergency at the end of September 2021 and property acquisitions in anticipation of the end of the COVID-19 pandemic. In the mainstay job posting business, the number of orders grew amid revitalized recruitment activities in anticipation of the end of the latest emergency declaration. The number of fee-paying members increased 38.9% YoY to 11,083. In addition, the number of related businesses that provide services to inshokuten.com (real estate companies, interior design contractors, etc.) increased, rising 4.3% YoY to 4,666 companies. The business reported full-year FY03/22 revenue of JPY1.8bn (+72.3% YoY) from external customers and segment profit of JPY447mn (vs. loss of JPY79mn in FY03/21).

M&A Intermediary business

This business includes M&A intermediary services aimed at facilitating the transfer of physical restaurant businesses or shareholdings in restaurant businesses, as well as support services for restaurateurs looking to buy/sell restaurants with the furnishings and fixtures in place. The number of sales deals temporarily stagnated while states of emergency and semi-state of emergency COVID-19 measures were in force, as public aid (in the form of compensation for cooperating with efforts to prevent the spread of COVID-19) slowed the appetite for sales. On the other hand, the average contract fee on M&A intermediary deals of ordinary size increased due to enhancement of the company's advisor system and its increasing maturity. The business reported full-year FY03/22 revenue of JPY142mn (+47.9% YoY) and segment profit of JPY4mn (vs. loss of JPY28mn in FY03/21).

Other business

The business consists of a recruiting service that introduces job seekers to businesses in the restaurant and other food service-related industries, including meal supply services. On July 1, 2021, Synchro Food absorbed Synchro Career. The business reported revenue of JPY3mn (-95.0% YoY) and segment loss of JPY2mn (vs. loss of JPY65mn in FY03/21).

FY03/23 company forecast

Company forecast

		FY03/21			FY03/22			FY03/23
(JPYmn)		1H Act.	2H Act.	FY Act.	1H Act.	2H Act.	FY Act.	FY Est.
Revenue		503	686	1,189	794	1,164	1,958	2,300
	YoY	-48.9%	-33.5%	-41.0%	57.8%	69.8%	64.8%	17.4%
Cost of revenue		110	116	226	115	155	270
Gross profit		170	793	963	679	1,010	1,689
	Gross profit margin	33.8%	115.7%	81.0%	85.5%	86.7%	86.2%
SG&A expenses		587	544	1,132	579	659	1,238
	SG&A ratio	116.8%	79.4%	95.2%	72.9%	56.6%	63.2%
Operating profit		-195	25	-169	100	351	451	470
	YoY	-	-91.8%	-130.3%	-	1,275.9%	-	4.3%
	Operating profit margin	-	3.7%	-14.2%	12.6%	30.1%	23.0%	20.4%
Recurring profit		-193	37	-156	101	351	453	470
	YoY	-	-88.2%	-128.1%	-	855.4%	-	3.8%
	Recurring profit margin	-	5.4%	-13.2%	12.8%	30.2%	23.1%	20.4%
Net income		-149	-29	-178	74	265	340	340
	YoY	-	-118.9%	-161.9%	-	-	-	0.1%
	Net margin	-	-4.2%	-15.0%	9.4%	22.8%	17.3%	14.8%

Source: Shared Research based on company data
Note: Figures may differ from company materials due to differences in rounding methods.

As stated in the new medium-term management plan announced at the time of the FY03/22 earnings announcement, the company will focus on strengthening and expanding existing core businesses going forward through the nationwide roll-out of its job ad service and expansion of its platform service, as well as expanding into new business areas through the promotion and expansion of mobility services and the roll-out of data services leveraging the member base.

Looking ahead to achieving the targets laid out in the new medium-term management plan, the company plans to make strategic investments into strengthening its structure through the recruitment of more engineers, directors and sales personnel, and expanding its network.

Historical performance versus company forecasts

Results vs. Initial Est.		FY03/13	FY03/14	FY03/15	FY03/16	FY03/17	FY03/18	FY03/19	FY03/20	FY03/21	FY03/22
(JPYmn)		Parent	Parent	Parent	Parent	Parent	Cons.	Cons.	Cons.	Cons.	Cons.
	Revenue (Initial Est.)					1,013	1,270	1,846	2,250	Undisclosed	Undisclosed
	Revenue (Results)	497	553	650	849	1,052	1,377	1,788	2,015	1,189	1,958
Results vs. Initial Est.		-	-	-	-	3.9%	8.4%	-3.2%	-10.5%	-	-
	Operating profit (Initial Est.)					366	483	661	690	Undisclosed	Undisclosed
	Operating profit (Results)	-	-	-	321	451	595	688	558	-169	451
Results vs. Initial Est.		-	-	-	-	23.1%	23.3%	4.1%	-19.2%	-	-
	Recurring profit (Initial Est.)					341	459	661	690	Undisclosed	Undisclosed
	Recurring profit (Results)	79	128	188	323	423	570	687	557	-156	453
Results vs. Initial Est.		-	-	-	-	24.2%	24.3%	4.0%	-19.2%	-	-
	Net income (Initial Est.)					221	289	444	439	Undisclosed	Undisclosed
	Net income (Results)	49	79	124	210	265	364	439	287	-178	340
Results vs. Initial Est.		-	-	-	-	19.7%	26.0%	-1.2%	-34.6%	-	-

Source: Shared Research based on company materials

Synchro Food started disclosing profit forecast in FY03/16. Based on the last two years’ results, the company appears to have set ambitious revenue targets. The company’s strategy emphasizes continually launching new services, and it includes anticipated earnings in forecast. Shared Research believes this is why the company’s revenue has fallen short of forecast.

In FY03/20, earnings results fell short of the initial forecast due to upfront spending to secure personnel and establish a more robust business structure, including at consolidated subsidiaries, and it took time to monetize operations at those subsidiaries. In FY03/21, the company did not release an initial forecast, explaining that user activity was unclear due to the impact of COVID-19 and the ongoing issuance and lifting of state of emergency declarations. In FY03/22, revenue and profit recovered due to customers' increased willingness to recruit.

New medium-term management plan (out May 13, 2022)

During the COVID-19 pandemic, the company reviewed its basic policy and business strategies for the future, and it announced its next business strategies in the new medium-term management plan. In FY03/25, the final year of the management plan, the company targets revenue of JPY3.0bn, operating profit of JPY750mn, an OPM of 25.0%, recurring profit of JPY750mn, and net income of JPY532mn. Shared Research plans to report further details following interviews with the company.

Medium-term outlook (as of FY03/18 results announcement)

Synchro Food announced a medium-term plan through FY03/23 along with its FY03/18 results. Note that on April 15, 2020, when the company revised its earnings forecast, it temporarily withdrew its numerical targets that had been included in the initial medium-term plan announcement. Nevertheless, Shared Research believes the direction of the company’s business strategy remains in line with the medium-term plan. The following detail regarding the medium-term plan is as of the time it was first announced. The company has indicated that it will restructure its medium- to long-term management strategy to take into account the protracted pandemic and the post-pandemic environment.

Mission and vision redefined

The company redefined its mission as “Connecting the world of food, creating the food of the future,” and its vision as “Becoming an innovative food platform.” Under its mission, the first step in connecting the world of food is to put in place suitable infrastructure that will carry the company through to the stage where the future of the world of food is created. The vision entails strengthening its existing platform to the point where it becomes indispensable to the world of food.

Targeting OPM of around 40%

Synchro Food said that it would like to maintain revenue growth of 20% and an OPM of around 40% in the medium term. Its long-term targets are 200,000 registered members, 15,000 fee-paying members, and 6,000 registered business operators by FY03/23. When it first announced the medium-term plan, Synchro Food forecast an OPM of 30.7% in FY03/20, a YoY decline, and explained that this assumed temporary costs such as those involved in relocating the headquarters. However, the actual FY03/20 OPM was 27.7%.

Medium-term plan: numerical targets at time plan was announced

Source: Shared Research based on company data
Note: FY03/21 earnings targets are figures from when they were initially announced. As of April 15, 2020, the company has withdrawn its medium-term plan targets for FY03/21.

The company has initiatives in the following three focus areas.

Strengthening platform capabilities: Aims to strengthen the platform’s range of capabilities through developing new services targeting all aspects of the restaurant operations business; expanding the number of members and operators served; and providing marketing data and analysis to users and operators, to become the foremost supplier of restaurant-related services to the industry.

Geographic expansion and deepening: Aims to strengthen its revenue structure at the Tokyo head office, and Osaka and Nagoya branch offices to expand its market shares in each of these regions. In addition, it aims to develop inshokuten.com’s range of services, conducting market research on opportunities for overseas expansion with a view of localization.

Development into peripheral businesses related to restaurant operations: Looks to expand into restaurant-related industries, such as catering and food supply area and recruitment/outplacement services to provide support for chef/dietician/managerial dietician, leveraging the inshokuten.com platform with its newly consolidated subsidiary, Wit playing the center role.

Strengthening platform capabilities

Strengthening platform capabilities entails the development of new services, growing the numbers of members and registered business operators, and data accumulation, analysis, and sales.

The development of new services covers all business functional areas. For example, up to now it has been involved in job ad placement, orders, and procurement. Synchro Food plans to expand its services to include recruitment, training, and attracting customers—priority areas for restaurant management. In order to expand its service offerings, the company is open to collaborations with other companies and acquisitions as well as in-house development.

One benchmark that indicates the capabilities of a platform is its ability to gather in numbers. To maximize the network effect, the company is working to grow not just the number of members, but business operators and other registered members. As its service areas expand, the company has also more target users and target businesses. It is thus establishing a business-oriented marketing structure to actively grow the number of registered businesses. Further, its ongoing efforts to promote the influx of new users include investing in advertising and enhancing content such as owned media.

Growth in the number of registered members and data analysis

By commercializing the accumulation, analysis, and sale of registered member data, the number of registered members on the company’s platform now exceeds 150,000 members (as of end-FY03/19). These comprise restaurateurs as well as the next wave of restaurant operators, and results of surveys covering these users are valuable market data. Synchro Food plans to strengthen its business that provides marketing data and analysis output to clients such as food manufacturers and research companies.

Geographic expansion and deepening

Synchro Food has begun creating structures suitable to specific regions in Japan and overseas as part of its geographic expansion and deepening efforts.

In the domestic market, the company had developed a framework with almost complete countrywide coverage in the provision of recruitment services by FY03/18. The next step is to put in place a nationwide marketing structure run out of three locations: Tokyo head office (in charge of Kanto, Hokkaido, Tohoku, Hokuriku, and Shinetsu); the Osaka branch (Kansai, Chugoku, Shikoku, and Kyushu); and the Nagoya branch (Tokai region). The company plans to boost its shares in both user numbers and business operators.

Domestic structure

Source: Shared Research based on company data

In overseas markets, Synchro Food first aims to conduct careful market analysis and restaurant business research and roll out some localized inshokuten.com services in parts of Asia and North America. An example is business support services for domestic customers expanding outside Japan and Japanese restaurants overseas. Because the overseas business environment is different from that in Japan, when localizing, the company aims to collaborate with partners such as foodstuff trading companies and local companies. According to the company, as of May 2018, it had already launched trial runs of localized versions of its existing PlaceOrders procurement system for restaurants serving Japanese food.

Overseas structure

Source: Shared Research based on company data

Development into peripheral businesses related to restaurant operations

Synchro Food plans to leverage its inshokuten.com platform to move into businesses peripheral to restaurants. The company streamlines its businesses by making use of consolidated subsidiaries Wit Co., Ltd., and Synchro Career Co., Ltd. (established after Synchro Food released its medium-term plan). As of FY03/20, the company has given the subsidiaries distinct roles, with Wit responsible for an M&A intermediary business specializing in the restaurant industry and Synchro Career responsible for a personnel recruitment business focused on the restaurant and meal supply industries. Note: Synchro Career will be merged with the company in July 2021 due to changes in the market environment caused by the COVID-19 pandemic.

Domestic meal supply market

Source: Shared Research based on company data

Business

Business model

Offering comprehensive food industry information

On its websites, Synchro Food registers restaurant operators, jobseekers, suppliers, and others involved in the restaurant business. As of end-FY03/21, 206,432 restaurant operators, 189,676 jobseekers, 2,829 realtors, 537 interior contractors, and 1,109 foodstuff suppliers had registered as members. As membership increases, the websites are able to extend their coverage by accumulating more information pertaining to restaurant management. As a result, the websites grow more convenient for all parties involved in the restaurant business, thereby driving further increases in the number of registrants.

That said, more members do not translate directly into higher earnings for Synchro Food. Rather, the company generates revenue through three paid services via its websites.

- Ad placements (job postings by restaurant operators and ads by suppliers targeting restaurant operators)
- Introductions (of suppliers to restaurant operators, of properties available for furnishing-and-fixture sale, and of restaurant M&A), which generate success fees
- Online sales of kitchen supplies

Synchro Food also provides some matching services for free.

Promoting the use of paid services by members leads to higher earnings for Synchro Food. To increase usage frequency, the company’s core strategies are to improve the appeal of its websites, drawing even more members and raising the penetration rate. At the same time, Synchro Food looks for new services it can monetize.

Registered members, by category

No. of registered members	FY03/18	FY03/19	FY03/20	FY03/21	YoY
Restaurant operators	129,069	152,321	178,078	206,432	15.9%
Real estate agents	2,129	2,332	2,534	2,829	11.6%
Interior contractors	530	543	525	537	2.3%
Foodstuff suppliers	1,073	1,095	1,102	1,109	0.6%
Jobseekers	93,774	117,492	147,586	189,676	28.5%

Source: Shared Research based on company data

Low cost encourages registration

The company attracts members for registration on inshokuten.com by making all of its websites easy to find. This involves search engine optimization (SEO), and starts with analysis of typical search engine software algorithms, followed by constant tweaking of the websites accordingly. The company also uses online ads and social media to attract members. It is not increasing the number of salespeople to boost registrations.

Combination of free and paid services for members

The company’s business depends on connecting restaurant operators with other registered members, which include real estate agents and jobseekers. When restaurant operators want to open a new restaurant, they can look for a property among the ads placed by member real estate agents. They can recruit staff by placing a job posting on one of the company’s websites and receiving applications from member jobseekers. Synchro Food earns revenue from ad placements by restaurant operators or suppliers. The company does not charge success fees, such as when a lease or employee contract is signed.

Paid and free services concept map

Source: Shared Research based on company data

Restaurants constantly opening and closing; one-fourth of Japan’s restaurant operators are already members

The number of member restaurant operators is rising, and was over 200,000 as of end-FY03/21. According to the 2019 Economic Census by the Ministry of Internal Affairs and Communications, there are 520,000 restaurants in Japan (excluding bars, cabarets, and nightclubs). A simple calculation shows that approximately 40% of restaurant operators is registered with Synchro Food. The company’s service territory primarily encompasses the Kanto and Kansai regions, and in 2018 it began offering its services in the Kyushu area and Hokkaido as well. Shared Research thinks the number of registered users will continue growing.

The company offers services on the following five websites.

inshokuten.com
Restaurant property information, kitchenware e-commerce, foodstuff supplier selection, and recruitment management

job.inshokuten.com
Specialist restaurant staff recruitment site

tenpodesign.com
Matching site connecting operators thinking of opening or renovating restaurants with interior contractors

job.tenpodesign.com
Recruitment information for interior design industry covering interior contractors, product designers, and CAD operators

inuki-info.com
Site for operators planning to close restaurants to search for restaurant assessment services and buyers (via inshokuten.com)

Landing pages for company websites

inshokuten.com

job.inshokuten.com

tenpodesign.com

job.tenpodesign.com

inuki-info.com

Source: Shared Research based on company websites

Free and paid services for users

The following table shows the various services provided via the five sites and the subsidiaries, with indications of which are free and which are paid. In consideration of the number of registered users and usage status, some of the services currently offered for free may later be changed over to paid services.

Services provided to registered members (FY03/20)