The Company is a leading operator of a chain of ramen restaurants in the Tohoku and Kanto regions of Japan. Ramen is a Japanese-style Chinese noodle, usually served in a broth with bits of meat and vegetables, and is a popular food among Japanese.

The origin of the Company's business can be traced back to 1954 when Tsukasa Niida, the father of Tsutae Niida, the current Chairman and Representative Director of the Company, opened his first restaurant in the city of Aizu-Wakamatsu, Fukushima. The Company was incorporated in 1970 and consisted of four ramen restaurants in Aizu-Wakamatsu.

In 1975, the Company opened a factory which produced noodles, gyoza (Chinese dumpling) and other food and food ingredients to supply to the Company's restaurants. In 1984, the Company expanded its operations outside of the prefecture of Fukushima by opening a restaurant in the city of Sendai, Miyagi. The Company continued to open additional restaurants in the surrounding areas and, in 2003, it opened its first ramen restaurant in central Tokyo. In the year ended March 31, 2004, approximately half of the ramen restaurants the Company opened during this period were located in the greater Tokyo area.

In 1998, the Company launched its pork cutlet business and opened its first restaurant primarily serving pork cutlets. In 1999, the Company established K.K. Tonkararin, a wholly owned subsidiary of the Company, to conduct the pork cutlet and obento (Japanese assorted meal boxes) business. Commencing in October 2002, the Company converted all of its pork cutlet restaurants into Japanese food restaurants offering various low-priced Japanese foods under the name "Wafu Chubo Denpachi". In April 2003, K.K. Tonkararin changed its name to K.K. Denpachi.

The Shares were registered for trading on the over-the-counter market of the Japan Securities Dealers Association in 1997, and listed on the Second Section of the Tokyo Stock Exchange, Inc. ("TSE") in 2002 and on the First Section of the TSE in 2003.

Activities

The present business of the Company comprises of three business segments: Ramen, Other food services and Other.

Ramen

The Ramen segment is engaged in the production and sale of ramen and gyoza and the sale of noodles, soups, food ingredients and sundry supplies. Most of the ramen restaurants operate under the name "KOURAKUEN".

In order to manage its relatively large ramen chain, the Company has developed uniform methods regarding food preparation, sales and store management which are adopted at all of its ramen restaurants. A large amount of the food used by the ramen restaurants, such as noodles and gyoza, are produced by the Company's two factories, and are supplied to the restaurants through the Company's own distribution system. In June 2004, the Company commenced the operation of its second factory in the city of Odawara, Kanagawa.

On June 7, 2004, the Company executed a basic agreement with the city of KyoTanabe to purchase land located in the prefecture of Kyoto for the purpose of constructing its third factory. The purchase of the land is subject to approval by the city council of Kyo-Tanabe. The Company expects to spend approximately JPY 3.5 billion to acquire the land, construct the factory and acquire the necessary equipment to operate the third factory. The third factory is scheduled to commence operations in January 2007.

Most of the ramen restaurants are directly managed by the Company, although some of the restaurants are operated by franchisees under franchise agreements with the Company. The Company uses standard forms of franchise agreements. The term of the agreements is three or five years. The agreements are automatically renewed every three years, provided, however, that if either of the franchisor or franchisee terminates the agreement, the agreement shall not be renewed. Franchisees are required to pay to the franchisor a royalty each month based on a certain percentage of the monthly gross sales of each franchisee restaurant. As of March 31, 2004, the royalty fee was five percent. K.K. Kourakuen Associate Tokyo, a wholly owned subsidiary of the Company, is engaged in the business of developing new franchisees and providing management training to franchisees in the central Tokyo area. As of March 31, 2004, the Company or its subsidiaries operated 181 ramen restaurants and its franchisees operated additional 18 ramen restaurants.

Other food services

The Other food services segment operates and manages the Japanese food restaurants under the name "Wafu Chubo Denpachi" and sells pork cutlets, other Japanese foods and obento. In the past, a wholly-owned subsidiary of the Company called K.K. Tonkararin (currently, K.K. Denpachi) was engaged in the sale of pork cutlets and obento in this segment. However, K.K. Tonkararin recorded an operating loss for each of the four consecutive years ended March 31, 2003 and all restaurants operated in this segment were converted into the above Japanese food restaurants in the year ended March 31, 2003. The Company supplies certain food ingredients and rents certain real estate to K.K. Denpachi to conduct its business.

As of March 31, 2004, K.K. Denpachi directly operated seven restaurants. No franchisee restaurant is operated in this segment.

Other

This segment includes all of the other businesses engaged in by the Company and its subsidiaries. Three companies, wholly owned by the Company, conduct these businesses. K.K. Den Hoken is engaged in the insurance agency business. It arranges damage and life insurance policies mainly for the Company, its subsidiaries and the franchisees of the Company. K.K. Value Line provides construction and design services. It designs and constructs restaurant interiors and provides related construction management and supervision services for the Ramen and Other food services segments. K.K. Screen conducts an advertising agency and marketing business. It produces and sells printed advertising materials, television commercials and plans and manages special events for businesses engaged in by the Ramen and Other food services segments of the Company.

The following is a summary of the Company's consolidated financial data for the years ended March 31, 2002, 2003 and 2004 and as at March 31, 2003 and 2004.