Summary of Kura Sushi Conference Call Company Overview - Kura Sushi is a subsidiary of Kura Japan, established in the U.S. in 2009, and went public in February 2022. [3][4] - The company has expanded from 4 states to 20 states plus Washington D.C., with over 70 restaurants. [4] - Kura Sushi has maintained a unit growth rate of over 20% annually for the last five years, positioning itself as a significant player in a fragmented sushi industry. [4][5] Core Business Insights - The sushi industry is highly fragmented, with Kura Sushi and Nobu controlling only about 2% of the market revenue. [5] - Kura Sushi leverages technology to enhance operational efficiency, including the implementation of a reservation system and the introduction of the Ishrobot for automation. [5][6] Value Proposition - Kura Sushi focuses on providing high-quality ingredients at competitive prices, with a price gap of approximately 50% compared to competitors. [10][11] - Recent limited-time offers (LTOs) have included high-quality items at lower prices, showcasing the brand's unique value proposition. [9][10] IP Collaborations and Comp Trends - The company has increased its IP collaborations to 7-8 for the next fiscal year, aiming to reduce volatility in comparable sales. [12][13] - The first month of IP campaigns tends to outperform the second month, which is a strategy to enhance sales consistency. [13] Reservation System Rollout - Over 60 units have implemented the reservation system, which is expected to significantly improve customer experience by reducing wait times. [15][16] - The reservation system aims to eliminate the two-step decision-making process for customers, enhancing overall satisfaction. [17][18] Tariff Impact and Cost Management - Approximately 60% of Kura Sushi's supplies are sourced overseas, primarily from Asia and Japan. [20] - The company has experienced a minimal impact of 20 basis points on cost of goods sold (COGS) due to tariffs, thanks to strong supplier relationships. [22][26] - Kura Sushi has successfully reduced its COGS from 30% to the low 29% range over the past three years. [23] Labor Costs and Inflation - The company has faced unexpected high single-digit labor inflation but anticipates a return to low to mid-single digits. [30][31] - Labor-related initiatives are expected to yield significant benefits during high sales periods, improving operational efficiency. [32][33] Expansion Strategy - Kura Sushi aims for a 20% unit growth rate, focusing on quality site selection and management. [44] - The company has a strong pipeline for new locations, with a goal to achieve a 50-50 split between new and existing markets by fiscal 2027. [42][43] Financial Position - Kura Sushi has $100 million on its balance sheet and does not anticipate needing additional capital raises to sustain its growth. [45][46] Customer Feedback and Improvements - The primary customer complaints have been related to wait times and the accuracy of wait times, which the reservation system aims to address. [48][51] - Adjustments have been made to the prize system for families to enhance customer experience and increase plate consumption. [52] Conclusion - Kura Sushi is positioned for continued growth through strategic expansion, technological advancements, and a focus on customer satisfaction, while effectively managing costs and navigating market challenges. [54]

Company Overview - Kura Sushi USA, Inc. is a technology-enabled Japanese restaurant concept with 76 locations across 20 states and Washington DC [1] - The company offers a distinctive dining experience based on authentic Japanese cuisine and a revolving sushi service model [1] - Established in 2008 as a subsidiary of Kura Sushi, Inc., which has over 650 restaurants internationally and 45 years of brand history [1] Upcoming Events - On June 3, 2025, the company will host a fireside chat at William Blair's 45th Annual Growth Stock Conference in Chicago, IL, starting at 12:00 p.m. CT [2] - On June 4, 2025, the company will host a fireside chat at TD Cowen's 9th Annual Future of the Consumer Conference in New York, NY, starting at 2:45 p.m. ET [2] - Both discussions will be webcast live on the company's corporate website under the investor relations section [2]

Financial Data and Key Metrics Changes - Total sales for the fiscal second quarter were $64.9 million, compared to $57.3 million in the prior year period, representing a growth of approximately 28% [25][28] - Comparable restaurant sales performance was negative 5.3%, with traffic down 8.5% and price/mix up 3.2% [11][25] - Restaurant-level operating profit margin was 17.3%, down from 19.6% in the prior year [13][28] - Adjusted net loss was $1.7 million or negative 14 cents per share, compared to an adjusted net loss of $1 million or negative 9 cents per share in the prior year [28] Business Line Data and Key Metrics Changes - The company opened 11 new restaurant units to date, with three openings during the second quarter [11][13] - The performance of new restaurant openings, particularly in Bakersfield, California, has been strong, indicating potential for future growth in new markets [14][15] Market Data and Key Metrics Changes - Regional comparable sales were negative 1.5% in the West Coast market and negative 8% in the Southwest market [25] - The company estimates that weather conditions in Q2 represented a comparable headwind of 400 to 500 basis points [12] Company Strategy and Development Direction - The company aims to return to a 50-50 split of new and existing markets by fiscal 2027, which is expected to serve as a comparable tailwind [16] - The company is focusing on building a strong pipeline of intellectual property (IP) collaborations, with seven to eight planned for fiscal 2026 [16][90] - The rollout of a new reservation system is a top priority, with positive initial feedback from testing in three restaurants [20][106] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining a 20% restaurant-level operating profit margin for the full year, despite uncertainties related to tariffs [39][41] - The management noted that while there is uncertainty in consumer behavior due to recent market conditions, they remain optimistic about achieving positive comparable sales for the full year [61][63] Other Important Information - The company has $85.2 million in cash and cash equivalents and no debt, indicating a strong liquidity position [29][100] - The company expects total sales for fiscal year 2025 to be between $275 million and $279 million, with plans to open 14 new units [30] Q&A Session Summary Question: Performance through the quarter and weather impact - Management noted that performance improved in March after adverse weather conditions in January and February [35][36] Question: Margin expectations for 2025 - Management remains confident in achieving a 20% margin for the full year, although there is increased uncertainty due to tariffs [39][41] Question: Consumer spending concerns - Management indicated that they do not interpret recent performance as a slowdown in consumer spending, especially given the positive results in March [48][51] Question: Tariff implications on supply chain - Management is still assessing the impact of tariffs on costs and is in discussions with suppliers to mitigate potential increases [57][60] Question: New unit openings and development pipeline - Management confirmed plans to open one more store in Q3 and two stores in Q4, maintaining a strong unit growth rate [78][80] Question: IP partnerships and future collaborations - Management confirmed that they expect to run IP partnerships for the balance of the fiscal year, with a focus on impactful collaborations [123][126]