Kura Sushi USA(US:KRUS)2021-04-14 02:44Financial Data and Key Metrics Changes - For the fiscal second quarter, total sales were $9.1 million compared to $19.4 million in the same period last year, resulting in a comparable sales decline of 60% [16] - Food and beverage costs as a percentage of sales increased to 35.0% from 31.5% in the prior year quarter, while labor and related costs as a percentage of sales decreased to 22.7% from 31.7% due to a $2.2 million employee retention credit [16][18] - The net loss was $3.9 million or negative $0.46 per diluted share compared to a net loss of $100,000 or negative $0.02 per diluted share in the second quarter of 2020 [18] Business Line Data and Key Metrics Changes - Off-premises revenue was $2.4 million, representing significant growth from approximately $1.3 million in the previous quarter, with off-premises sales accounting for 26% of total sales during the fiscal second quarter [13][14] - The company opened two new restaurants during the fiscal second quarter and has plans for additional openings, maintaining development momentum despite the pandemic [10][11] Market Data and Key Metrics Changes - Sales in California began to recover in February with the resumption of outdoor dining, although this was partially offset by severe winter weather in Texas [6][7] - March revenue exceeded $5 million, a significant improvement from February's revenue of $3.1 million, driven by relaxed dining restrictions [9] Company Strategy and Development Direction - The company aims for a 20% unit growth CAGR over a five-year period starting in fiscal 2019, with a strong pipeline for fiscal 2022 [11] - The new Kura Sushi app was launched to enhance online ordering and rewards integration, with over 100,000 combined reward members and app users [12] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about recovery as COVID-19 cases decline and vaccinations increase, indicating readiness to capitalize on pent-up demand [15] - The company is transitioning from a defensive to a more aggressive strategy regarding capital expenditures and growth plans for fiscal 2022 [20] Other Important Information - The company has $2.3 million in cash and $12 million in debt, having borrowed an additional $9 million to meet planned capital expenditures [19] - General and administrative expenses increased to $2.9 million compared to $2.8 million in the prior year, primarily due to compensation-related expenses [17] Q&A Session Summary Question: Can you provide more color on Texas comping positively? - Management confirmed that Texas comping positively refers to the period in March after the seating capacity was increased to 100% [25] Question: What impact did outdoor dining have on off-premises sales? - Management noted that off-premises sales decreased from $860,000 in January to $650,000 in February due to the reopening of outdoor dining, but increased to $680,000 in March [27] Question: What is the real estate environment like for new store openings? - Management indicated a strong pool of real estate opportunities and substantial leases signed for the fiscal 2022 pipeline [31] Question: How are labor market conditions affecting hiring? - Management acknowledged industry-wide hiring challenges but stated that they are ramping up recruitment efforts to prepare for growth [56] Question: What are the average tickets for off-premises versus in-store dining? - The off-premises ticket averages in the low $30s, while in-store dining averages in the low $20s [61] Question: How does the company view menu pricing in the future? - Management stated that pricing adjustments have historically been tied to minimum wage increases, but they are open to reevaluating pricing strategies moving forward [76][77]