Kura Sushi USA(US:KRUS)2025-07-08 22:00Financial 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 year-over-year increase [14] - Comparable restaurant sales performance was negative 2.1%, with traffic down 2.9% and price and mix positive 0.8% [14] - Cost of goods sold as a percentage of sales improved to 28.3% from 29.2% in the prior year quarter [15] - Labor costs as a percentage of sales increased to 33.1% from 32.6% in the prior year quarter due to wage inflation [15] - Net income was $565,000 or $0.05 per share, compared to a net loss of $558,000 or negative $0.05 per share in the prior year quarter [18] - Adjusted EBITDA increased to $5.4 million from $4.5 million in the prior year quarter, marking a 20% increase [19] Business Line Data and Key Metrics Changes - The company opened three new restaurants during the third quarter and two additional units after the quarter ended, achieving its unit development guidance of 14 new restaurants for the fiscal year [7][8] - Restaurant level operating profit margin was 18.2%, down from 20% in the prior year due to increased labor and occupancy costs [18] Market Data and Key Metrics Changes - Comparable sales in the West Coast market were flat, while the Southwest market experienced a decline of 2.5% [15] - 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 [10] Company Strategy and Development Direction - The company aims to achieve a 50-50 split between new and existing markets by fiscal 2027, with ongoing development in previously unexplored DMAs [10] - A new light rice option was introduced to enhance customer experience and potentially drive sales [12] - The company is revamping its marketing strategy with a record number of collaborations planned for fiscal 2026 [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 [6] - The implementation of the reservation system is expected to drive operational efficiencies and improve customer experience [12] - Management remains cautious about raising guidance too early, reflecting on past experiences [29] Other Important Information - The company has $93 million in cash and no debt at the end of the fiscal third quarter [19] - General and administrative expenses as a percentage of sales are expected to be below 13% for the fiscal year [20] Q&A Session Summary Question: Inquiry about the new reservation system and its impact on same-store sales - Management noted sequential improvement in sales throughout the quarter, with the reservation system rollout contributing positively [25][28] Question: Clarification on tariff implications and cost structure - Management indicated that they are currently assessing the impact of tariffs, with 45% of their basket sourced from Japan, Korea, and Vietnam [40][42] Question: Discussion on restaurant margins and future outlook - Management acknowledged the difficulty in achieving a 20% margin for fiscal 2025 but remains confident in returning to that level in fiscal 2026 [46][48] Question: Insights on new store productivity and market expansion - The company reported that the Class of 2025 openings are performing strongly, particularly in the Pacific Northwest [57] Question: Update on technology initiatives and operational efficiencies - Management highlighted the potential of the robotic dishwasher and ongoing improvements to the reservation system to enhance operational efficiency [109][110]