Climate Change

• Extreme weather may cause negative effects to stores and production areas, including floods caused by typhoons or heavy rains, landslides and coastal hazards, which gradually become normal phenomena. 

• Climate change leads to uneven distribution of rainfall, which may increase the frequency and intensity of droughts, causes water scarcity which in turns restricts the available water for farmland, and eventually leads to land fallowing.
• Climate change also causes uneven temperature distribution, which may affect the stability and quality of agricultural products supply.

• Set up regulations by charging a certain amount on greenhouse gas emissions, which can cause the increase of operating costs.

• The implementation of Taiwan Greenhouse Gas Reduction and Management Act which imposes tax on industries can increase NT$ 5,698 thousand of operating costs.

• Fine imposed for violating air pollution control act caused by cooking emissions, which can cause the increase of operating costs.

• Fine imposed for violating air pollution control act caused by cooking emissions can reach up to NT$ 100-1000 thousand.

• Some of the stores still using gasoline motorcycle for delivery, and An-Shin is gradually replacing themwith electric motorcycles. 

• Using electric motorcycle for all delivery service is estimated to raise the operating cost by NT$ 1,563 thousand.

• Invest in smart farm, food factory, and etc.in response to the impacts of climate change. However, there are some potential losses on investment due to errors in positioning, investment targets, or some technical bottlenecks.

• Competitiveness of smart farm, food factory, etc. may be affected by the market price, which can result in higher costs and lower profit.

• Customers/shareholders/media’ s negative responses and comments on products or services due to the rising awareness of sustainability. 

• Negative response and comments may cause the decrease in demand and decline the revenue by 0.39-0.48%. 
• The adaptation of environmentally friendly ingredients, for example, replacing all the CNS eggs to free-range egg is estimated to raise the cost by NT$ 14,700 thousand. 

• Increased maintenance fee for the infrastructures or systems, and their malfunctioning may completely stop the operation of stores, which leads to declining revenue. Besides, the logistics and supply chains also face difficulties as a result of system malfunctioning. 

• Heavy rain for a short period of time will cause ​flooding that damages equipment and accelerates asset depreciation. Besides, it will also increase the maintenance fee, stop the stores from operating, and reduce the operating income by 0.095-0.103%.

• Frequent rainfall and low-lying areas are more likely to experience severe flooding, which causes difficulties in store operations.

• Changing rainfall patterns lead to frequent rainfall and low-lying areas are more likely to experience severe flooding, which will cause the earlier scrapping of assets.

• Climate risk in agriculture, including floods caused by typhoons or heavy rains, landslides and coastal hazards, which will gradually become normal phenomena.
• Uneven distribution of rainfall may increase the frequency and intensity of droughts, and causes water scarcity which in turns restricts the available water for farmland, and eventually affects the stability and quality of agricultural products supply.

• An increase in average temperature will increase the cost of electricity consumption (air-conditioning in stores), which leads to the increase of operating expenses, and the company may need to invest more in changing the business model.

Opportunity

Product and Service

• The rising food delivery service and changes in consumer habits have led to declining revenue.

Increase in Market Demand

Resource Efficiency

• Improve work environment safety, employee satisfaction, reduce the loss rate of food ingredients, increase production capacity and income.

• The increase in waste disposal costs has led to higher operating costs.

Increase in Production Capacity

• Upgrade the kitchen equipment and pass part of the food processing to the central kitchen (food processing factory) for unified processing and  distribution. The logistics adopts electrical vehicles to improve production capacity and reduce operating expenses.

• Use indirect food contact food packaging that is made of recycled materials to reduce the extraction of primary resources. 

Increase in Operating Expenses

• Use paper towels, trays, decoration materials, and dining tables and chairs that are made of recycled materials to enhance brand and consumer identity, and further drive the operating income.

• Improve the energy and water efficiency in existing stores such as using LED lights, sensor lights, inverter air conditioner, and water-saving toilet and faucet. For the newly open stores, the energy and water efficiency are directly considered in designs.

Increase in Asset Value

• Fully equip the stores with LED lights, use sensors lights in areas such as toilet or aisles, and replace the normal air conditioners with inverter air conditioners. Besides, replace the traditional toilets and hand-washing stations with water-saving equipments. 

Energy Source

• Support local agriculture and fisheries to enhance brand image and promote the products. 

Increase in Market Demand

• Collaborated with city government to launch new product which uses local ingredients such as the Dragon Tiger Grouper Rice Burger with Salted Egg Yolk Sauce, which successfully increased the income by NT$ 13,346 thousand.

Product and Service

• Reduce the development of beef products and replace by other meat products (chicken, fish). Besides, introduce new diets (plant-based) to reduce negative impacts of climate change.

Increase in Market Demand

• Introduce vegetarian diets (plan-based meat) or low-carbon diets (chicken, fish), the estimated increase of income for each new product is NT$ 20,000 thousand.

Market

• Launch new products (low-carbon, vegetarian) to meet the market needs and increase the income, and eventually copy the business model to the global markets.

Develop New Markets

• Launched MOS Burger with Beyond Meat and oat milk drinks according to the market needs, and promote them to the MOS Burger in Australia and 

  Mainland China to increase brand awareness and income.

• Promote local agricultural products and equipment renewal in response to the government policies, and apply for the related subsidies.

Increase in Capital

• Engage in climate change related projects initiated by the government, include the renewal of equipment and apply for the related subsidies. The subsidies total/increase in capital of NT$ 1,200 thousand was received.

Flexibility

• Increase the number of suppliers to ensure supply chain stability (quantity and quality).

Stable supply chain

Sign contracts with farmers or use imported products for some of the agricultural products to maintain the stability of supply chain, control operating costs, and minimize the procurement risks.