Core Viewpoint - Kura Sushi USA is optimistic about its fiscal first-quarter performance, expecting positive comparable sales in Q2 and maintaining guidance for flat to slightly positive comps for the full year, despite facing margin pressures from tariffs and sales deleverage [1][6][21]. Financial Performance - Total sales for the fiscal first quarter reached $73.5 million, an increase from $64.5 million in the prior-year period, while comparable restaurant sales declined by 2.5% due to negative traffic and flat pricing [3][7]. - The company reported an operating loss of $3.7 million and a net loss of $3.1 million, with adjusted EBITDA decreasing to $2.4 million from $3.6 million year-over-year [9][7]. Pricing Strategy - A 3.5% menu price increase was implemented on November 1, which did not fully benefit the first quarter; effective pricing for the quarter was noted at 3.5%, with expectations of 4.5% in the fiscal second quarter [2][6]. Margin Analysis - Food and beverage costs accounted for 29.9% of sales, up from 29.0%, attributed to tariffs on imported ingredients; labor costs decreased to 32.5% of sales from 32.9% due to pricing and operational initiatives [10]. - The restaurant-level operating profit margin was 15.1%, down from 18.2% in the prior-year quarter, with management expecting margins to stabilize around 18% for the full year [11][6]. Growth and Development - Kura Sushi opened four new restaurants during the quarter and has 10 more under construction, aiming for a total of 16 new units in fiscal 2026 [5][13]. - The company ended the quarter with $78.5 million in cash and no debt, indicating strong liquidity [14]. Marketing and Loyalty Initiatives - The company has reached 1 million rewards members, with members spending approximately $6 more per person compared to non-members [18]. - Kura Sushi is enhancing its marketing strategy with collaborations and promotions, including themed offerings tied to popular franchises [15][16]. Operational Improvements - Robotic dishwashers are scheduled for installation in Q3, with expectations for improved labor costs in fiscal 2026 through various operational initiatives [19]. - Management is optimistic about improving labor leverage and reducing general and administrative expenses through aggressive cost management [4][10]. Guidance and Outlook - Kura Sushi reiterated its fiscal 2026 guidance, projecting total sales between $330 million and $334 million, with an expected restaurant-level operating profit margin of approximately 18% [24][20].