Kura Sushi USA(US:KRUS)2022-01-07 04:26Financial Data and Key Metrics Changes - For Q1 2022, total sales were $29.8 million, compared to $9.4 million in the prior year period, reflecting a significant recovery [31] - Comparable sales growth was 19.9% compared to the pre-pandemic fiscal first quarter 2020 [10][31] - Restaurant-level operating profit margin improved to 19.5%, up from a loss of 9.9% in the prior year quarter [37] - Adjusted EBITDA was $800,000, compared to a negative $4.1 million in the first quarter of fiscal 2021 [38] Business Line Data and Key Metrics Changes - Off-premises revenue was $1.3 million, with a sales mix of 4.5%, slightly down from $1.4 million and over 5% in Q4 [14] - Food and beverage costs as a percentage of sales decreased to 30% from 32.4% in the prior year quarter [32] - Labor costs as a percentage of sales decreased to 32.5% from 46.3% in the prior year quarter [33] Market Data and Key Metrics Changes - Texas was the strongest market with regional comps of 27.8%, while California had regional comps of 12.4% [13][31] - December comp growth was just over 14% compared to December 2019, impacted by the Omicron variant and operational challenges [26] Company Strategy and Development Direction - The company opened its first new restaurant of the fiscal year in October and entered the Arizona market with two units in December [20] - Full-year development plans remain on track with two more units under construction and fully executed leases for the remainder of the pipeline [21] - The company is focused on technology initiatives such as table side payment and touch panel drink ordering to enhance customer experience and operational efficiency [27][49] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in the resilience of the business model despite challenges posed by COVID variants [11] - The company expects to maintain total sales between $130 million and $140 million for fiscal year 2022, assuming no further COVID-related restrictions [39][40] - Management noted that operational challenges due to the Omicron variant are temporary and that they expect normalization in operations [25][60] Other Important Information - The rewards program grew by over 30%, with 73,000 new members joining in Q1, indicating strong customer engagement [29] - General and administrative expenses increased to $5.4 million, primarily due to investments in team compensation to support growth [34] Q&A Session Summary Question: Capacity limitations and December comp headwind - Management acknowledged meaningful impacts on sales due to capacity limitations from the Omicron variant, particularly in late December [45][46] Question: Increasing table turns and traffic recovery - Management discussed initiatives like table side payment and robot servers to improve table turn times and enhance customer experience [49][51] Question: Sales guidance clarification - Management indicated that guidance considers recent trends and challenges from Omicron, with expectations for moderation over the year [61] Question: Restaurant-level margins and inflationary impacts - Management expressed optimism about margins, noting that pricing strategies and customer value perception bode well for future growth [67] Question: Market entry strategy - Management confirmed that they will continue to pursue a balanced strategy of entering new markets while filling existing ones, unaffected by pandemic pressures [70][116] Question: Off-premises sales trends - Management noted a slight decline in off-premises sales as a percentage of overall sales due to full dining room capacity in Q1 [81] Question: Technology initiatives impact - Management confirmed that table side payment is fully rolled out and is expected to improve service efficiency [108] Question: Future promotions and partnerships - Management highlighted increased opportunities for partnerships with larger brands since going public, enhancing promotional capabilities [111]