Financial Data and Key Metrics Changes - The company generated a 2.2% year-over-year increase in total revenue to $55 million for Q2 2025, attributed to new restaurant openings [15][61] - Cost of goods sold as a percentage of restaurant sales increased by 97 basis points to 33.8% in Q2 2025, reflecting inflationary cost increases and more new restaurants in operation [16][61] - The company reported a net loss before income taxes of $1.8 million, equating to $0.05 per diluted share, compared to a net income of $2.1 million or $0.06 per diluted share in Q2 2024 [18][63] - Adjusted net income was $1.2 million or $0.04 per diluted share in Q2 2025, down from $4.4 million or $0.13 per share in the same period last year [19][64] - Restaurant level adjusted EBITDA was 16.3% for Q2 2025, an increase of 70 basis points from the previous year [20][65] Business Line Data and Key Metrics Changes - The company opened seven new restaurants in 2025, with a total of nine new restaurants opened year-to-date, on pace to exceed the target of 12 to 13 new stores [5][51] - The average unit volume (AUV) revenue is $5.3 million per restaurant, which is considered elite in the casual dining space [9][53] Market Data and Key Metrics Changes - The company experienced a sharp downturn in customer traffic in April due to global tariffs and immigration policies affecting regions with a large Hispanic customer base, which accounts for 35 of its 52 restaurants [6][52] - Improvements in sales and costs were noted starting in July, indicating a recovery from the downturn [8][52] Company Strategy and Development Direction - The company is focused on a value-oriented experimental dining model, which is believed to resonate with guests and support long-term growth [5][50] - Plans for international expansion include additional restaurant openings in South Korea, with the first store opened in a suburb of Seoul [5][50] - The company is enhancing its product offerings, including gift cards and packaged products, to diversify revenue streams beyond restaurant sales [12][58] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing macro pressures but expressed confidence in the company's growth strategy and operational efficiencies [4][5] - The company is implementing automation and AI tools to improve labor efficiency and overall margins [36][83] - Management remains committed to their guidance of 17% to 18% on four-wall margins despite recent challenges [81][82] Other Important Information - As of June 30, 2025, the company had $9.6 million in cash and cash equivalents, with only $7 million in long-term bank debt [20][66] - The balance sheet reflects $166 million in lease liabilities, offset by $142 million in operating lease assets, indicating no material debt [21][67] Q&A Session Summary Question: Can you quantify the same store sales progression throughout the quarter and the improvement seen in July? - Management noted a significant decline in sales during April, May, and June, with a bounce back in July, aided by a 2.8% price increase at the beginning of the year [25][28][73] Question: How have the new units from Q1 been performing, and what is the status of the South Korea location? - The new openings from Q1 are performing at an average level, while the South Korea location is seeing slow but improving sales [29][30][76] Question: What is the tracking of premium menu adoption and its implications for COGS? - Management indicated a COGS differential of 0.5% to 1% with an expected sales increase of 5% to 7% as premium menu items are rolled out [31][32][77] Question: Any updates on guidance for revenue and four-wall margin? - Management confirmed that projections for 17% to 18% on four-wall margins remain unchanged despite the challenging quarter [35][81] Question: What operational efficiencies are being implemented to offset macro challenges? - The company is deploying automation and AI tools to enhance labor efficiency, expecting to see benefits in margins in the upcoming quarters [36][83] Question: Is the quality of general managers the biggest challenge to accelerating unit development? - Management stated that the challenge is multifaceted, including the need for quality managers, real estate, and capital [37][85]

Financial Data and Key Metrics Changes - In Q1 2025, the company reported a 13% year-over-year increase in total revenues to $57.3 million, driven by restaurant expansion and success in existing locations [5][19] - Same store sales decreased by 0.7% in Q1 2025, a significant improvement from a 5.6% decline in 2024 [7] - Restaurant level adjusted EBITDA margin was approximately 15.6%, slightly below the annual goal of 17-18% due to costs from new restaurant openings [7][19] - The company reported a net loss before income taxes of $2.1 million, compared to a net income of $3.8 million in Q1 2024, which included a one-time gain [21][22] Business Line Data and Key Metrics Changes - The company opened six new restaurants in Q1 2025, increasing the total to 49, with plans to open 12-13 new stores by February 2026 [6][16] - Adjusted EBITDA for Q1 2025 was $1.2 million, down from $6.4 million in Q1 2024, but adjusted EBITDA excluding one-time gains was $3.3 million, only slightly down from $3.6 million in Q4 2024 [22] Market Data and Key Metrics Changes - The company is expanding into South Korea, planning to open three new restaurants in 2025, with the first expected to open by the end of Q2 [15][16] - The construction cost for new units in South Korea is projected to be 25-30% lower than in the US, providing compelling potential returns [55] Company Strategy and Development Direction - The company focuses on a value-priced all-inclusive dining model, which is expected to support long-term growth [5] - The dual concept store model, combining Jen and Con Sushi, aims to capture more customers and improve operational efficiency [13][14] - The company is exploring partnerships for gift card sales to enhance brand strength and customer engagement [12] Management's Comments on Operating Environment and Future Outlook - Management acknowledged macroeconomic pressures affecting consumer demand, particularly in early 2025 [30][31] - The company remains confident in achieving its revenue target of $245-250 million for 2025 and aims for an annual run rate approaching $300 million by the end of the year [16][26] - Management is prepared to pause new restaurant development if tariff-related cost increases significantly impact ROI [17][47] Other Important Information - The company has a strong liquidity position with $15.4 million in cash and only $5 million in long-term debt [23][25] - The founder's ownership of 85% aligns their interests with public shareholders, supporting long-term growth strategies [24] Q&A Session Summary Question: Can you discuss same store sales progression in Q1 and current trends in Q2? - Management noted strong performance in January and February, but a slight decline in March and continued negative trends in April and May [30][31] Question: What gives confidence in achieving the 17-18% EBITDA margin target for 2025? - Management indicated that Q1 is typically the lowest quarter and expects to improve margins as the year progresses [43][44] Question: What are the expectations for build costs in 2025 amid tariff impacts? - Management expressed uncertainty about price increases for kitchen equipment and construction materials from China, indicating a potential pause in construction if costs rise significantly [47][48] Question: How are the new restaurant openings performing? - Management stated it is too early to assess performance, with mixed results from the new locations [49] Question: Can you break down Q1 performance in terms of average check versus traffic? - Management reported a 2.5% increase in average check but a 10-11% reduction in customer traffic, resulting in a net decline of less than 1% [52] Question: What are the prospects for the South Korean market? - Management highlighted the competitive landscape and lower construction costs, indicating a cautious but optimistic approach to expansion in South Korea [55][56] Question: What is the current redemption rate for gift cards? - Management indicated that the redemption rate has stabilized around 65%, which is above the industry average [58]