Financial Data and Key Metrics Changes - Total sales for Q4 2025 were $79.4 million, up from $66 million in the prior year period, representing a comparable sales growth of 0.2% [5][3] - Adjusted EBITDA grew over 30% year-over-year, reaching $7.4 million compared to $5.5 million in the prior year quarter [3][5] - Net income was $2.3 million or $0.18 per share, compared to a net loss of $5.2 million or negative $0.46 per share in the prior year quarter [5][3] - General and administrative expenses as a percentage of sales improved to 11.7% from 20.3% in the prior year quarter [5][3] Business Line Data and Key Metrics Changes - Labor as a percentage of sales improved to 31.1% from 31.4% in the prior year quarter, despite ongoing labor inflation [3][5] - Restaurant-level operating profit as a percentage of sales was 19.8%, down from 20.9% in the prior year quarter [5][3] - Food and beverage costs as a percentage of sales remained stable at 28.4% compared to 28.5% in the prior year quarter [5][3] Market Data and Key Metrics Changes - Comparable sales in the West Coast market were negative 0.6%, while the Southwest market saw positive growth of 1.6% [5] - Effective pricing for the quarter was 3.5%, with a menu price increase of 3.5% implemented on November 1st [5][3] Company Strategy and Development Direction - The company plans to open 16 new units in fiscal 2026, maintaining an annual unit growth rate above 20% [5][3] - The introduction of status tiers to the rewards program is underway, aimed at enhancing customer engagement [3] - The company is focusing on improving product offerings and sourcing, with a commitment to providing unbeatable value to customers [28][29] Management's Comments on Operating Environment and Future Outlook - Management acknowledged macro pressures affecting the industry but expressed confidence in the company's resilience and growth potential for fiscal 2026 [3][5] - The expectation for Q1 2026 is a negative mid-single-digit comparable sales growth, attributed to year-over-year comparisons rather than a worsening environment [11][13] - The company anticipates a restaurant-level operating profit margin of approximately 18% for fiscal 2026 [5][3] Other Important Information - The company has secured commercial use certification for its robotic dishwasher, which is expected to improve labor efficiency by approximately 50 basis points [4][19] - Cash and investments at the end of Q4 2025 totaled $92 million, with no debt [5][3] Q&A Session Summary Question: Insights on recent comp trends and IP collaborations - Management noted that while macro pressures exist, marketing efforts have helped maintain positive comps, with IP collaborations contributing positively [9][10] Question: Expectations for Q1 comp trends - The expectation for Q1 is negative mid-single digits due to challenging year-over-year comparisons, with a focus on maintaining traffic [11][13] Question: Implementation timeline for robotic dishwashers - Implementation is expected to start in Q3 2026, with a more pronounced impact on labor efficiency anticipated in fiscal 2027 [21] Question: Strategic changes in response to consumer challenges - The company is focused on incremental improvements across departments to enhance value perception among consumers [28][29] Question: Impact of tariffs on costs and pricing strategy - The company has taken a 3.5% price increase and expects COGS to be around 30% for fiscal 2026, reflecting ongoing negotiations with suppliers [23][5] Question: New store productivity and AUVs - New store productivity has improved, with the latest class of openings performing strongly, contributing positively to the AUV comp base [35][36] Question: Reservation system impact and improvements - The reservation system has not been a major traffic driver yet, but improvements are being made to enhance user experience and operational efficiency [41][43]

Kura Sushi USA FY Conference Summary Company Overview - **Company**: Kura Sushi USA (NasdaqGM: KRUS) - **Fiscal Year**: 2025 - **Conference Date**: September 11, 2025 Key Points Reservation System Implementation - The introduction of a reservation system aims to reduce multi-hour wait times, especially on weekends, enhancing customer experience by seating guests within two minutes of arrival [2][3] - The system is expected to drive positive same-store sales in fiscal 2026, with plans to advertise it outside the rewards program [2][3] IP Collaborations - Fiscal 2025 saw a lack of IP collaborations for a couple of months, leading to questions about their impact; however, the company confirmed that these collaborations are significant revenue drivers [9][10] - An IP committee was established to manage and increase the number of collaborations, with plans for seven to eight campaigns in fiscal 2026 compared to the typical four to five [11][15] - The success of the Hollow Light campaign demonstrated that smaller, passionate audiences can effectively support campaigns without traditional giveaways [12][13] Cost Management and Supply Chain - 65% of purchases are sourced overseas, with 45% from Japan, Vietnam, and South Korea; tariffs currently stand at 25% for Japan [17][18] - The company expects to mitigate tariff impacts through vendor negotiations, aiming for a 50-50 split on tariff costs [17][18] - Effective pricing strategies are in place, with a 2% price drop scheduled for November 1, leading to expectations of significant pricing power thereafter [18] Store-Level Margins and Labor Costs - The company aims to achieve a restaurant-level margin of 20% or better in fiscal 2026 [16] - Labor costs have normalized from high single-digit inflation to low single-digit inflation, with expectations for continued improvement in fiscal 2026 [37][38] Development Strategy - The company plans a 70% focus on existing markets and 30% on new markets for fiscal 2026, anticipating a 400 basis point headwind to same-store sales [30][31] - The pipeline for fiscal 2026 looks promising, with expectations for improved unit economics and reduced cannibalization effects [31][32] Cash Position and Future Outlook - Kura Sushi holds approximately $90 million in cash and investments, with expectations to become cash flow positive in the next four to five years [40] - The company sees significant growth potential in the sushi market, particularly due to industry fragmentation and post-pandemic shifts in consumer behavior [42] Loyalty Program Enhancements - The company is working on a tier-based loyalty system and frequency-based giveaways to enhance customer engagement and drive repeat visits [25][26] Dishwashing Robot Initiative - The certification process for a proprietary dishwashing robot is nearing completion, with potential retrofitting in up to 50 existing restaurants, expected to reduce labor costs by about 50 basis points [27][28] Additional Insights - The company is optimistic about the total addressable market, especially following positive developments in previously unexplored markets like Bakersfield [42] - The focus on asset-light IP campaigns and innovative marketing strategies is expected to drive future growth and customer engagement [12][15]

Financial Data and Key Metrics Changes - Total sales for the fiscal third quarter were $74 million, compared to $63.1 million in the prior year period, representing a growth of approximately 17.5% [15][20] - Comparable sales growth was negative 2.1%, with traffic down 2.9% and price/mix up 0.8% [8][15] - Cost of goods sold as a percentage of sales improved to 28.3% from 29.2% in the prior year quarter [9][17] - Labor costs as a percentage of sales increased to 33.1% from 32.6% in the prior year quarter due to wage inflation [17][19] - Restaurant level operating profit margin was 18.2%, down from 20% in the prior year quarter [9][19] - Adjusted EBITDA increased to $5.4 million from $4.5 million in the prior year quarter, a 20% increase [20] Business Line Data and Key Metrics Changes - The company opened three new restaurants during the third quarter and two more subsequent to the quarter end, achieving its unit development guidance of 14 new restaurants for the fiscal year [9][10] - The class of 2025 restaurants has performed well, with many exceeding expectations shortly after opening [10] Market Data and Key Metrics Changes - Comparable sales in the West Coast market were flat, while the Southwest market saw a decline of 2.5% [15][17] - The company is focusing on smaller DMAs, with successful openings in Bakersfield, California, and plans for further expansion into markets like Des Moines, Richmond, and Tulsa [11] Company Strategy and Development Direction - The company is implementing a new reservation system, which has been rolled out across all restaurants ahead of schedule, and is expected to drive operational efficiencies and improve customer experience [7][13] - There is a renewed focus on intellectual property collaborations, with seven to eight lined up for fiscal 2026, which is a record for the company [11][12] - The company aims to achieve a 50-50 split between new and existing markets by fiscal 2027, with ongoing development in previously unexplored DMAs [11] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about sequential improvement in comparable sales performance each month of the quarter [8][15] - The company is confident in achieving a 20% plus operating margin in fiscal 2026, supported by a strong pipeline of IP collaborations and the reservation system [46][47] - Management noted that labor inflation is expected to moderate in the upcoming quarter, which should help with labor cost leverage [32] Other Important Information - The company has $93 million in cash and no debt at the end of the fiscal third quarter [20] - General and administrative expenses as a percentage of sales were reduced to 11.8% from 14% in the prior year quarter, attributed to lower public company costs and operational efficiencies [18][19] Q&A Session Summary Question: Can you elaborate on the new reservation system and its impact on same-store sales? - Management noted that the reservation system rollout began in late February and showed sequential improvement in sales performance, particularly in May when the first IP campaign was introduced [25][26][29] Question: What are the expectations regarding labor costs and inflation? - The company expects mid to low single-digit labor inflation in Q4, which should improve labor cost leverage if sales are positive [31][32] Question: Can you provide insights on tariff implications and their impact on costs? - Management indicated that they do not foresee a significant impact from tariffs on food and beverage costs, and they are negotiating with suppliers to share any potential cost increases [40][41][42] Question: What is the outlook for restaurant margins moving forward? - Management acknowledged that achieving a 20% margin in fiscal 2025 is challenging but remains confident in reaching that target in fiscal 2026 due to improved sales and operational efficiencies [44][46] Question: How is the company managing general and administrative expenses? - The company is focused on maintaining tight control over hiring and operational efficiencies, which has led to a reduction in G&A expenses as a percentage of sales [79][81] Question: Can you discuss the performance of new store openings? - The class of 2025 openings has been strong, particularly in the Pacific Northwest, and management is optimistic about future openings in new markets [56][57] Question: What are the expectations for the light rice initiative? - The light rice option has been well-received in test markets, and management is confident it will drive increased sales and customer satisfaction [122][124]

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]