Earnings call transcript Q2 2023

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Operator

Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the Kura Sushi USA, Inc. Fiscal Second Quarter 2023 Earnings Conference Call. At this time, all participants have been placed in a listen-only mode, and the lines will be open for your questions following the presentation. Please note that this call is being recorded.

and we Uttz, Uba, Benjamin Chief Vice Investor today, Executive and Porten, call President, Jeff Officer; Financial Relations the have President Jimmy Chief Senior On Development. Business Officer; and

like I'd call Mr. turn And now, to over the to Porten.

Benjamin Porten

the everyone, afternoon, in A access joining. can have the thank you our be release release. the It fiscal section. second earnings found Good By operator. all of to been everyone www.kurasushi.com now, Investor also you, Relations included copy we and X-K Thank earnings the at should to for has SEC. quarter XXXX in submitted

to cause Before Act our need expect. differ and not are discussion I for XXXX. statements are risks statements of we could condition. uncertainties discussion numerous a Private of as These all to of include more on will refer that the forward-looking operating We from could These that statements performance, should forward-looking part our materially risks formal you future and begin guarantees and today therefore our not you detailed put results of also defined Reform SEC remind future them. reliance impact Litigation remarks, that the to undue financial under filings to everyone results what subject of actual our we Securities

are not GAAP. earnings additional measures comparable should be in accordance believe during prepared evaluating Also information reconciliations financial a And available non-GAAP considered our release. of in today's substitute the to call, nor we useful as in can this results The certain which we in will with our GAAP measures, for discuss performance. isolation presentation be

over I of to would out turn the the to call like With way, Jimmy. that

Jimmy Uba

the G&A investment. unit It's fiscal everyone goals earnings thank our of on for be to this each It's we previous for three Kura delivering and been call, able year; In Sushi. our these and you today. our maintaining Ben, my that you, exceptional had guests, results to expansion, I value leveraging our to quarter Thank mentioned operations excellent for an us continuing say joining pleasure goals. to unbeatable rapid and seeing great are

to continue And by performance, our extremely our strong. demonstrated X.X% industry in consumer the with We lead quarter. traffic as sentiment of traffic second growth remains the

Our across under has unit existing strongest and pipeline is it been, markets. ever nine the new the executed nine with leases and units another construction

a Our adjusted in in the combined with in has success EBITDA expansion improvements previous G&A, XXX restaurant-level point leveraging costs, margin over basis resulted year.

prior represent XX% Our second year. $XX.X the over revenue of quarter million growth sales

down our the of delivered restaurant comparable remains growth to sales Our consumer strengths been the price which never XX.X%, have sentiment traffic and and and stronger. value our mix. and Despite pricing, growth breaks in unparalleled X.X% XX% in

million XX.X%. over with strong $XX.X into performance revenue Our continued March comparable sales of sales and

operating results. Turning to

We both have cost material improvement seen labor in and of goods sold.

further year. a as pricing, the we sales COGS XXXX. in resulting the of a cost points of by points be by operating of a December the prior margin our over restaurant-level the improved percentage profit quarter. to realized efficiency we improvement as of sales saw continue basis Restaurant XXX prior XX.X%, point over basis percentage XXX cost and of approaching have improved labor saw a Our all-time as COGS inflation Between the prior basis year, percentage are and best fiscal our in flattening sales XXX over

achieve adjusted we profitability by EBITDA basis G&A we able a XXX an as our margin terms we by of early corporate to year. strategies our and of XXX been net this grow It's grow were Cumulatively, growing we sales the for points over cost, expect [future] to compared income In to and XXX as we succeed scale. what indication able can improve as and percentage pleasure only of basis points points year. believe see were margin corporate the basis is prior continue prior to by to

quarter, restaurants, New new second opened Brook, During our Philadelphia; we three Edison, Jersey; Oak and Illinois.

very the and that particular, previous tremendous In in East locations with permitting mentioned with Jersey these market unprecedented opening that our Coast impacted Philadelphia are and performance delays we the underscoring restaurants of Edison pleased We represents. of opportunity the have the Philadelphia. calls, City

and seen permitting any haven't are such one of those We since, concern we anomalies. believe

more ever executed Looking feel have an comfortable fiscal our on with XXXX ahead, start XXXX fiscal not than it only excellent and construction stronger under unit pipeline been, restaurants extremely about leases. but growth has head our achieving is nine development. our also We unit guidance, nine

cadence one expect note in third a remainder the QX. during with we the As on opening of quarter unit the openings,

progress the made which to on of Waitlist of potential has believe biggest Finally, we [account XXXX. we the implementation app, driver] fiscal be new our meaningful have our the

the algorithm evening. As app the Waitlist particularly we of past mentioned times, in highly our provides close to current calls, conservative of wait end estimate

improvement the have off-peak customer satisfaction, attrition, on major to in three potential traffic expect in the additional to revised drive algorithm impacts We and hours. reduced

our I'm in well. seen we we that marketing has been growing December extremely highly first on with The engine the targeted began as pleased optimization advertising time initiatives have effective progress guest. in and search

XXX,XXX current the of compared November our Our as growth we [levied] reward continues to during be the XXX,XXX membership-based to extremely members noted call. account earnings with members

Waitlist new of priority. a implementation the app immediate the is more However,

on out working our also are updated rewards program We Punch. loading with

brand sure remember being just our prior campaign April, as the I'm we summer second successful we from most began Additionally, yet. demonstrated our which collaboration in

DC summer, momentum recent over the As of things we of just brand is partnering this very to indication another Kura that has announce come, seen that a preview happy years. I'm which with be to will Comics

progress consistently to able restaurant result our possible. such grateful make corporate be to report staff strong to members for It's a on honor this and team an incredibly and spectacular initiatives, our I'm by and privilege work support and the

that, with discuss Jeff to it turn liquidity. And I'll and results financial Jeff? to over our

Jeff Uttz

Jimmy. Thanks,

sales $XX.X reflects to in the compared year were in comps Texas. regional regional minimal due with relatively the in XX% compared growth total XXXX faster period. prior as pandemic. to million with performance recovery $XX.X becomes XX.X% and a Comparable as the quarter, prior against positive in second XX.X% difference period California variance XX.X%. sales XX% California the Texas's of and comparable from The million For restaurant comps QX for the pre-pandemic comparison was comps fiscal to California with three-year This easier regional of sales comparison Texas of year

sales costs, food were a costs percentage XX% Turning as year to the XX.X% quarter. beverage prior of in to compared and as

pleased to with that in with to very seeing. able and increases, costs combined we the curve price inflation and we continue food encouraged are trends our We that beverage to were flattening the the be the impact our of are minimize

the impact percentage related as a favorable comparison and in sales prior XXXX leveraging the in and XX.X% Labor increases. partially of a wage increased due created by year costs fiscal This sales quarter. was is incremental from decrease This lapping by the technological offset efficiencies XX.X% pricing. the decreased in of to and traffic to implementation initiatives, of from of Omicron leveraging

sales the percentage the Occupancy expenses due and prior leverage. related sales XX.X% were to compared XX.X% also in year of as to to costs sales to to Other as X% sales leverage. quarter year decreased due of a prior a X.X% quarters percentage compared

were year as a compared million to the basis, driven prior of expenses quarter. G&A internally the compared a the management invested in developing $X.X talent. expenses million with sales year recruiting administrative in to dollar $X.X both by XX.X% percentage and as On as quarter decreased increase XX.X% General compensation as prior largely the to and in we

G&A with pleased very are we focus leverage expenses mentioned, as leverage G&A going our in previously to Jimmy hold have continue forward. the As main seen a we and

was of quarter. million to Operating $X operating on an million prior $X.X the loss year as compared loss

sales was X.X% to year to the as year X% As the Income in on a loss prior expense quarter. compared of was prior percentage $X,XXX qurater. $XX,XXX the loss of tax compared operating

to profit of EBITDA million to of $X or operating net loss Restaurant-level in a share per was as the percentage quarter. diluted prior per diluted sales the $X.X the was was XX.X% loss $X.XX to year in prior compared compared $X.XX quarter. million year year Adjusted or quarter. XX.X% million share million in $X.X Net prior $X.X compared a

and and have cash debt. no we equivalents Turning end liquidity. the quarter, cash in million second the to fiscal $XX.X At and cash of

Lastly, I update guidance following fiscal the reiterate would XXXX. and to for like

total sales between be $XXX $XXX We million to expect and million.

capital We be as expenses unit expect net to approximately average million, and $X.X XX.X% expenditures XX%. administrative open to we and and units XX per with of between nine sales between approximately and of general a expect percentage

guidance our no in behavior macroeconomic trends. that assumes consumer Please or changes material note broader

In performance no with of the at move with era, quarter longer keeping earnings fiscal current we the first quarter-to-date on policies. pandemic year, addition, pre-pandemic reporting the as in beginning call, we will from our quantify conclusion

it back turn to With to that, like I'd over Jimmy.

Jimmy Uba

Jeff. This prepared concludes our Thanks, remarks.

open happy the have. We any questions answer you please line questions. for to are now Operator,

the a Japanese reminder, Thank you my response As for Q&A attention. during translated before in I answer session, is into may your English.

Operator

and [Operator time, will of at Jeremy Hamblin with the with question conducting Our be your question. a Please gentlemen, session. line Craig-Hallum. question-and-answer Instructions] Ladies we this comes from first proceed

Jeremy Hamblin

positive seeing on strong benefit. you're impact you in results the and do volume be. get the see to business. comps? to opportunity parts be terms the get You what you and the some live really really of do version mentioned and could wanted have based think is the an I efficiencies you of potential what the in magnitude Thanks, with day just think going on for process, understanding kind to sense Wanted the the app think to time of congratulations in wait can a potentially a for to new momentum potential expect back what that initial of lower come the on when fully you a

Jimmy Uba

I'm is Jeremy Language] you, to allow for to happy your Japanese. speak question. going this answer please Thank in me Ben Sure. but to translate. first question, [Foreign

Benjamin Porten

the currently year a in updated stores by list. are end five wait we and the rollout the list of full wait We fiscal testing expect

Jimmy Uba

Language] [Foreign

Benjamin Porten

results. prior minutes. we're within we wait We're now seeing XX%. What to implementation, concrete encouraged five test improvements the seen were If the say, about we've accuracy. to of time very very waiting We're upwards XX% initial seen is, in by we've times, accurate of

two terms to X but closes wait think attrition restaurant same you when In says the shoulder Those at rates we a pretty and because meaningful because, going worst go there's to to not the you waited, get a time the everybody say, because the and gotten we of the at we're we've wait days. o'clock of get are XX not I mentioned, we're that especially reaction, know at dinner had would've hours, and we going periods we the has end seat. opportunity seat,

wait having just hour. that so last that for unlocks time by efficiencies more accurate operational that And greater

is time other the – wait weekday it's XX opportunity periods, one annoying, off of weekday you bit your XX in over big or terms by lunches. it's but a is little so just In frustrating, shoulder day a can If longer. minutes, is see and we wait dinner

you've time your by meal wait or lunch lost XX is your If XX opportunity. off lunch, minutes, your

And very meaningful and a so to really think can dial we opportunity for that once we communicate our in that the that's accuracy guests, – us.

Jimmy Uba

[Foreign Language]

Benjamin Porten

the into our guidance. given So tremendously we're [wisely] upside while built haven't rollout existing we this for opportunity the just represented models into expectations, our by excited financial

that's And if lift a crazy for so us. there's

Jeremy Hamblin

Great. then one just color. That's helpful And me. for last

able you of color any terms back, and bringing to at other pretty some now partner a But I potential it's results run? of partner. you're terms you've that share Demon summer, to end it versus the just think April be that? that – impact on talk the license you in promos that I the I of licensing that you Slayer about of might think particular significant In could running in think last the promo, ran

Benjamin Porten

Yes.

Slayer, was you we not ever. XX%, sure one quarter in by and I'm a component most Demon Comps in driven August last of from it Demon So entirely traffic. of major remember did that of July our XX% year. quarters Slayer were successful Certainly but

et get cetera. it's XX giveaways terms April's and we'll of this largely shirts a where the have and plates Slayer, In have you tote to be format going like prize, Demon we bags, the same

tremendously One you the and you can day, big mentioned other start so expect happens and first Director campaign, fan speaking Marketing exciting, is have But actually is and starting expand counterintuitive the with the that such able bigger what that is I thing is the that. campaign, to second that be was that than you Demon wouldn't you successful more because with your they campaign Slayer Slayer then Demon through property, you're a campaign, when that base base. first – with second the

opening for and really remarks, in but us. mainstream for for Jimmy Comics past are can with our be during DC mentioned do working excited And I'm sort tremendously been this so we're alluding and I've that. excited that's going first Demon property American very to And Slayer we what to calls, the as major of

Jeremy Hamblin

the Fantastic. color for Thanks and best wishes.

Benjamin Porten

Jeremy. Thanks,

Operator

comes question with of with Company. your from Todd next The Our question. Brooks Benchmark line Please the proceed

Todd Brooks

momentum of Thanks to marketing exciting seeing Hey. new and bringing congrats the early on success you showing you know, to talked see. that and I new Very to you're some brand. signs operating this approach all about customers quarter. Jimmy, the with the Kura of

have and once And But I think to gauge, this far and can loyalty to you has some track] the those that the we XXX,XXX of brand? revisit discover start in frequency we more Thanks. probably success [do could we're how are that one after. to additional that. they maybe point jump enough program converting customers we evidence intent into to

Jimmy Uba

this [Foreign answer Language] to happy I'm question. Sure.

Benjamin Porten

the with the traffic But extremely just were December. results. quarter only strength, we track]. four marketing above last three Google So with It's basis or pleased began points We're [NAV seeing we early been targeted in months. the XXX

actually basis above NAV quarter XXX This track. points we’re

incremental And in pack. effectiveness, really home just it's of no that. the even and really been unbeatable. it's so We're We've about digital of terms some other And so – our cost further advertising ahead a There's gotten reallocated even we've we've of run. been happy been spend.

Jimmy Uba

[Foreign Language]

Benjamin Porten

the ongoing because members. break about average our this is Xx of through the It's done just quarter year get as members tremendous – been points giveaway want visit whether this or break about happy to rewards to And hard out higher we're those sort for specific it's growth they two, of really rewards. non-member. or to rewards ongoing points. check the for a to this tend are growth coupon to new They last but as the frequently sales about rate strength. what We've have – Google seeing Their is the a or delivering XX%

potential it's And able to move We're our meaningful data be we represents of Punch. really very that program, when business. rewards of so the excited unlock part a to the extremely especially component to

Todd Brooks

units of great. Five question, into year. queue after Thanks. then this. And opened back I'll half the fiscal second jump That's the in my first

Sounds pipeline What to to opening – you is how where in any guys think like units the centers, for Thanks. XX and strong. in I with the were think in I'm QX, construction What full-year are is there highlighted one that units half unit the you between new open? back we and pinch the executed I'm very mostly with the operational under units lease which can process for between trying points us QX wondering is year. just an guidance? easier land of drives nine construction many

Jimmy Uba

Language] [Foreign

Benjamin Porten

teams. like on is in to is to goal hopefully those units draw have the the our QX existing and the thing remaining on opening not where certainly teams possible units evenly so support units happy operational the of So of leverage in there, openings distribute we these [indiscernible] open our are one as about teams. we're that existing and some But California really opening the to that one of can

so – And – we as get to front we're trying as the of in much we're doing as much can. ball

terms so end manpower higher a a it's of that of unit bottleneck not issue, for in us achieving guidance. the And that's

Jimmy Uba

Language] [Foreign

Benjamin Porten

in we're extremely units said confident XX such that the had those on XXXX. Jeff very happy nine a to about start what fiscal head repeat of we're got sort to Just prepared meaningful we've remarks, and

Todd Brooks

That's great. Thank you all.

Jimmy Uba

Todd. Thanks,

Operator

proceed Joshua Long the from question Stephens. comes question. next Please your with line with Our of

Joshua Long

if bit thinking the couple Could run January, quarter. back then taking XX.X% the a through December, there how I you the taken we about housekeeping through some I Great. quarter? progressed that of was of during about XX% know, The had for to a into incremental XQ also from could talked strong XQ. Thank comp price and comps area was talk we items. curious question. you

if of January how curious just sort that acceleration through So you and in quarter talk outline February? momentum about in of any then that the could and slowed saw you kind

Jimmy Uba

[Foreign Language]

Benjamin Porten

we're factor low-to-mid QX, be of comparison single difference comp. that That's between biggest to impact the Omicron. the terms QX going be digits brand probably began marketing In the that, we easier the targeted Besides of pleased the to Hero the December performance in of for did single well collaboration Academia. of that – our would responsible we the through and with very as in as we My with partnership

X% we reminder, March. lapsed As a pricing in

as results. with line pricing that completely March a back any think Omicron QX of means, the the don't and it's impact it's by so out in results lapse, really deceleration when – the And you

And for as very results the well. quarter-to-date so we're pleased with the

Joshua Long

And conversation, incremental – you had XQ kind just XXX of I helpful. be taken points into basis to an think feel I it XQ. maybe pricing That's that out then level Great. from setting turned like

Ben, roll in as points, think late you I has into for shook you your rolling had expecting full the should basis get of points menu price be you so where about March think the you XX% then And you didn't that for about XXX kind up embedded but in quarter? to XQ point, is XXX taken that what December, basis that December, for about off period? maybe so a we

Benjamin Porten

Yes.

Jimmy Uba

[Foreign Language]

Benjamin Porten

we hitting in pricing if we the benefit we not week first to enrolling was QX be We'll December, XX.X% first us with for X%. of the took day, March, carrying So meaningful throughout is but the had were more that QX. XX.X% effective during The still last quarter. carrying and clarify, partial, the up around so we're taken that price

well. traffic think being we're QX, very consumer in XXX As extremely positive points a traffic in remarks, prepared we position. in the the up We about strong as March happy in We're basis mentioned sentiment. being

Joshua Long

you good the that. helpful we helpful. terms much be the we about what cost able items to would the Previously how commentary. year should you year, is talked to maybe to term driving as think down. be things were appreciate gotten Anything to what of cooling very if might over case. of more you there some earlier I of expect initiatives, inflation seems the the you year? that course through share it like for curious visibility Is longer Understood. in the kind year. chain. Obviously, the see was sourcing in talk outlook the optimize or just I go about less had sounds maybe That be opportunities some to of these of could the some rest of about line supply That's

Jeff Uttz

Josh, Jeff. it’s Yes.

XX%. terms very cost of In is we’re think the what our with from fruition of as came started leave what inflation inflation, we had mentioned I happy in at that we can year-over-year I that number. with seen where see and deceleration X.X%, results see, to year-over-year about The in ICR had by is to we the which goods from QX sold you

So flow they're – increase, the because only a pricing that are kind continuing sides that both the the coming we're where equation. of leveling they're benefit – with of getting numbers through not out, show on getting because what to and and seeing inflation, but improving, took be double benefit a really we're continuing we're the happy to we off of we're

for the I'm our forward going is. with the COGS rest really forecast happy of So year, where

Joshua Long

was bit order to you of had tech terms margins? just a some little pretty you efficiencies those momentum, I driving of some initiatives and about tools, it's initiatives talk labor table the imagine Can but interesting about talked maybe super execution some that prior in here. impact robot drinks. alluded the operational But from better of was or been tech year-over-year the whether initiatives Great. That's the have servers, helpful. in have of some calls that priced, of

there had point, and about embedded those of – results think what the of been at course could I us dishwashing the is initiatives we XQ here think of some robot of discussion might kind the how rollout the over year? of what but you some maybe some some in remind is

Jimmy Uba

[Foreign Language]

Benjamin Porten

touch tech initiatives payment, panel the robots. In of and last drink the rolled impact the that labor out of orders, the we year, terms tableside the server

one to mind in last we've to thing XX keep that the As and seeing out the as that we're rolled lift today. in robot the of mentioned full we quarter, servers, rollout which labor reasons One about we're is improvement call, XX traffic robot points a well we was the our of servers. that had basis see continuing also the was when because QX, in first to it's a experientiality,

was up in because Our of experiential track that part edition. XX%

rollout from of we're traffic the And not still but QX, benefits, the have the the that so we'll in – going from as tailwinds servers. lap we that we novelty robot to had labor that have

Jimmy Uba

Language] [Foreign

Benjamin Porten

in But didn't hoping that we of place into And we're labor labor. XX% December a in hard XX us. we're ease, In seeing to about that's terms notice not operate it's we we the in leverage we've very see are restaurants. for improvement took It's year-over-year. built schedules baked can but people that working terms concrete reflected number because get in a required the point pricing our to – mentioned, expectations. We're We of to XX might very it from flow in for our basis the that number. through just full very that it's the the that hours

going do our going in to best and the QX that's manage But be to in that an for right so now. And that to us QX. factor that. market labor ongoing is we're absolutely We're

of is to it it's It's to you more of more It's labor going spend how but labor allows being a Historically, just able And expectation to serve dollars to going the certification, at one process. wide, just would the But from dishwasher, to which three really effectively. at the it's much that's In pretty terms that go. would a getting just initiatives, be years – the impact can, come coming it. as been more least in be have the lot given your that's as those not We're technology ultimately, day, of more. we the much guests is ready per terms we're in the it is certification agencies – going upside be of of Waitlist, leverage. that mercy. if we two opaque matter a pushing to advantage see to sales but

Joshua Long

some And being some me, guidance optimize about there? of of of investments just that margins? versus when much able helpful. the to early really of sort G&A we by in talked really investment is to of onboarded things That's about the when there near-term G&A think to of terms in sales driven Great. on in the of that leverage overall think for we terms optimize Is about these just G&A how spend timing and cadence of pipeline? as opportunities and the of last think one we more about, Jeff, given being How being you the terms range come efficiencies, spend kind in you are

Jeff Uttz

the We're continuing start. that quarter hard. very work that that's happy to with leverage we achieved XXX just this We're and in bps we and –

We've President those additional We're going going that's magnitude to now hires in reasons XX leverage. level and being to of is C-suite help G&A a Vice office forward, the right team that One out going of positions, investing people. to the of last lot money the the to we're continue that and spent see have not in terms of to able benefits now. expensive we built months, XX

more infill say instead to that's managers efficient We'll with more just able six their we'll area time other or of that efficient to states, on in and into maybe closer an much is compartmentalize the to them travel five be to thing side it'll markets to going well. or additional save restaurants, leverage restaurants five make will our be restaurants. are help more be with much The area four be the able as manager continue on having able and regional

really the those when more forward given number. a single-digit a haven't two going G&A things There is timeline to on more believe deliver So are I we're going leverage. get come, to down to going to that are

and really far is come. so seen to we've there what really, been more encouraging However, has

Joshua Long

Great. Thank you.

Benjamin Porten

is that To in of regional G&A bell the like that operations, that, going add sort a on managers follow spend spend the of to curve. terms

like will now, as the mentioned, to mentioned We've of So markets year need our but are a right two teams California, infill, to more you team. a regional million be each pipeline we well. assign each got we we as operate. part pretty manager, to were as an units Jeff the G&A able meaningful When about we about opening cost $X before don't per talking how opening

we to very And hope they'll investments – certain and G&A teams so need point. will and reach eventually as those regional managers we or unnecessary store teams meaningful you become actually become is a managers continue the – just can those infill, won't opening once

Jeff Uttz

development that to we've need estate as as order the And in not keep while those expensive going team to we're we have pipeline – in of [indiscernible], cut is. the making also real going G&A hires a most have and it place filled positions, to back on robust sure we that

mentioned to number the pattern restaurants as right add growth we it talked that we make to seen is it then that have order and we've Jimmy regional we to need be to we robust place executed we leases, we need area of keep teams in nine As continue nine as pipeline to the that in other and management. just the in want units in remarks, in more sure under about have prepared construction order the and the continue and to that

known to we that the restaurants to and customer area we're As for. sure are we to that that guest continue provide restaurants, have managers service to continue can add to going add best make support and the we we possibly

Joshua Long

Thank you.

Benjamin Porten

Josh. Thanks,

Operator

of the line your Please question. with from comes William question proceed next Zackfia Sharon with Our Blair.

Sharon Zackfia

fiscal kind I at or XXXX it part And of talk of far able cell My afternoon. you that Are Hi. apologize to you contrast and pipeline, Good pandemic? so about don't actually to, working? working I before now sites out on this know, kind of terms are if can talked maybe development now went the XXXX about you in But quality of of point? the this. get the a Jeff's kinds for commentary, you're of out you the how

Jimmy Uba

Language] [Foreign

Benjamin Porten

pipeline, units XXXX. they're couple the a is our XXXX, mostly speaking, at for XXXX there, sprinkled there's looking Generally fiscal what in we're but fiscal in of

Jimmy Uba

[Foreign Language]

Benjamin Porten

The to One possible as the sites that quality really, and to every as the Jimmy, have to and quality been into fun day. get the get that's that improving Jimmy of been successful are some been at been personally sites he many sites us just the of we've able as brought they've them as sites five being amazing. last we and are just the obvious is, it's to years, really the visit of looking tries waiting of I for hope. into, thing they're been

And been we Chief lines, that and places but Development everywhere. see. tenants to mentioned been would've built really wants with investments made the we who's very story fun signed I with the we're Westfield, Officer, to two hired that hour that's our that we are in that we a units, us inaccessible parent. how because thousands We know terms aggressive aggressively us great We have dinner at pandemic, of Westfield estate. during otherwise real of revolver people so first to familiar $XX like, one for million opened leases point, in we now.

seeing just better these leases, this so stores. of the snowballed. signed it's XXXX the was is fiscal boost – that the first just is what be that we limited an It's to XXXX getting when this were and extremely at there we're will excited, success But concern And better. and – time really internal but we

The been. strong expectation our is our are strong, pleased. very And just even as if going that stronger. as as development not ever stay to AUVs is We're it's so

Jimmy Uba

question? your all we of Did answer

Sharon Zackfia

question, Jimmy, but had more I if you I to didn't add. had follow-up a know

Jimmy Uba

No.

Sharon Zackfia

Okay.

I that curious, into I'm remains business? attach guess, traffic though growth Just seeing check of impressive. suggest lower you at one I to mean, very consumers management seeing or follow-up, manage the might fewer in? come try when starting creep anything kind check the the any they or you Are plates are beverage all to

Jimmy Uba

[Foreign Language]

Benjamin Porten

We're extremely sentiment. with consumer pleased

XX earlier, about we XX.X%, the comps, of price that saw As – the – and mentioned mix. QX XX% we of

price from comps, our and quarter mix. Last X.X% great. that's was so X.X% And of only

the than through eating average per more to And seeing plate grown – so better they And The check more even plates about has were we're person our per quarter. them before. guests flow are $XX. prior over

very of that spite eating It's so more. in been encouraging we're see. And pricing guests actually seeing, the to are

Jimmy Uba

Language] [Foreign

Benjamin Porten

go fundamental We been as saying when if consumer frequency you're strong. advantages weak. as But structural sentiment reducing extremely downturn, is. you Certainly, seen, if not is given some what is a concept times has mean, possible. have entertainment that even out, believe it do we're we've dollars the Kura has that as it But that advantages. dining far there you're your want we to of I a just

Nobody you sushi And so belt. can make a home, can at a conveyor certainly at you home, home. even at makes with steak grill sandwich not the

strong. our reasons has of one traffic that's so And that been the so

Additionally, it – the means way out. that we build ever nobody they by the guests our way where plate the the plate build experience meal, priced that is

we where be very position. We're excellent And to in so pleased we're are. an

Sharon Zackfia

Okay. Great. Thank you.

Benjamin Porten

Sharon. Thanks,

Jimmy Uba

Thank you, Sharon.

Operator

the of with line Our comes from questions. Capital. proceed ROTH Please George with next your Kelly question

George Kelly

Hey, everyone. my Thanks taking question. for

a you. So couple just for

curious could of initiatives calls, us for sourcing sourcing and I couple utilization about a update specifically prior the if The you on in first then Japanese that broadliners? you've potential the one, was talked

Benjamin Porten

so a have switch Yes. take the switch the we some going able a that'll in been do right shrimp favorable company. that to to important purchase up. We've something we the much work not that We've just whole we're it's the have we sure we're that coming in are at and We're some process. started is markets. started this We and to salmon That's efficiently more bit. make little in because products the the be with to time We've initiatives at flip and that Cisco getting deliveries got flip that of have before in, price on testing effectively completely dialed slowly that to and June. some in May coming

upcoming. that's So

I an think we've But talked about past. that's that exciting in the development.

we're Because once around too And about much excited where in that riding of markups board. of past, kind were be Not for and us and to well. of a place the going And everything really we've it'll paying, been forecasting. – kind to the system, be broadline much what into terms forward what be terms know able – we'll actual we'll the get of should we're more easier as in is, we across the to forecast of exactly mention market much results in exactly better a our to is one thing better COGS. be market going the I'm be in

out really that in we're we're we but So taking make in dialed wide. the roll process, sure it before to system it's slowly

George Kelly

as the the whether by So to you're roll out of what just assessing to you to if Or fully attempt start maybe something of something said, this you that be kind kind across is this of uncertain next fiscal you still expect and to that would implement year? repeat it you'll just were base? I

Benjamin Porten

I to we just by fiscal make properly. And next done it are it's of being will doing. implemented. be We're is sure the start something it believe taking slowly year, this

George Kelly

curious, question year. just for is you additional you. all then I in pricing partner, August if that's Comics and Thank [indiscernible] And another Okay. July specify had. question, or is DC the if timing taking Understood. you me, second Thanks. just And then when this that? are of And could contemplating the

Jimmy Uba

Language] [Foreign

Benjamin Porten

a be things have couple specific at to but price We we're point, would are X% July. have there be longer this benefit. that plans consider. no are to that in that useful no We'll lapping of going One

non-COGS mentioned, – ongoing are and inflation our markets. while in that we increases XX% there And in July had in Jimmy in easing, Angeles Los We wage expenses. that are are inflation especially still labor minimum that, seeing inflation COGS typically is seeing our

– not the It like be for be to make would flexible sure we decision we'd to best we plans, going in pricing would no that costs. whatever while reiterate price. able possible we're time. take we're so is increased we of why in current be have point driver. that offset purely to What this that not That's making to And terms margin take a

Jimmy Uba

Language] [Foreign

Benjamin Porten

it's done. We about have different in collaborations to us audience DC Comics. going We're think get excited what really front and the of past from new a

is haven't starting Demon Demon had and be thing bonanza, We like July whereas in that August. a DC really baked But Slayer. we'd it will Slayer see to August, in pleased one be and baked it, beat

George Kelly

Understood. Thanks.

Benjamin Porten

Thanks, George.

Operator

Please have Todd We of the with Benchmark a Company. proceed from with question line follow-up your Brooks question. The

Todd Brooks

in. for squeezing thanks me Hey,

course issues to chain going commodity believe back year the Just I last of the had robust, up. your keeping side, across when supply demand was

So deconsolidated. your a vendor little base got

more the inflation then we're As exit you reconsolidating with and that the scale targeted to to that side review with that. commodity way is the looking maybe fewer forward finding Thank results, sales be strong seeing process with advantages my you maybe as of margin there improvement predictability, an given then forecasting volume as do for towards year we're restaurant-level Jeff, that talked this and think place how that we're COGS in with are XXXX? going the at about thinking follow-up one the vendors, you're And into that the rate a is should about you. and for going initiatives about where that

Jeff Uttz

Yes.

what I pandemic of hand had the to bit Ben as ended throwing my let there’s were much were out of to up in stopped kind last on a well is as we pandemic. and year. the happened suppliers year of had elaborate a They how so So during last But terms Jimmy – much lot did the away they supply shy wasn't going the also product coming on pandemic, they during on as having understanding, much because of our I'm board. because and they little company with

they had just to go we up them, product. able we little suppliers kind because say, we the go a to pay year to did we other the able that to to wall really They bit against at them had go and need this negotiate COGS needed, were and we we new but last supplier, some were drove to to weren't we had it and our to provide that. for So their really with had a of backs quality

know no products buying supply were So really pre-pandemic especially of they vendors our back a large we of that lost, vendors [indiscernible] for we're there more And – is to were I that really additional? were from shortage supplying the part. and of just the it there any of was most suppliers the our anything that

Jimmy Uba

No.

you explained think, I everything.

Jeff Uttz

Okay. ask can more I'm time And one question again please? then you your second Todd, sorry,

Todd Brooks

Yes.

that to benefits the start earnings for that you rate in and going kind Just the to scale and Cisco fiscal I'm kind in an margins about inflation thinking rollout proceeding this I'm listening XXXX we're commentary you seeing on exit into of over and my guys the normalization year. year? get mind around trying are restaurant-level for would think what Thanks. call the so the power to just improvement maybe of sequential

Jeff Uttz

sequentially our is better with because of one, is we're margin QX, that the from on is eye fact very and And of standard believe our our they summer in That's if I seasonality is then and industry. two best pretty So is always XX% three the And better than all price. XX.X% slowest much of, time. our QX, quarter. that our better four, in get QXs QX, gold in highest hitting QX restaurant-level there. which happy restaurant the than not our one we quarter the did the QX is is

margin guest a there with service it much that continue or But drive to higher and the good to XX% I to be but continue number where restaurant-level is. QX, very We'll it, we're leverage, away going So than order happy at chip food quality in number in but not hit sacrifice we number to to able margin that. that opportunity, to is pretty with. believe a we're we're a as little is happy

Todd Brooks

go A few things – add sorry, Jimmy. that to ahead, I'm on

Jimmy Uba

[Foreign explanation. can Language] give additional you I

Benjamin Porten

that As reminder QX, continue through mentioned, and we potentially expect QX labor that to and inflation a we pass that do that.

not from profit as notes Jeff restaurant-level end, super thinking margin be And the modeling are because QXs restaurant-level be QXs A so operating margin might purposes your please that my for mentioned. seasonality other just helpful and of well. couple of mindful exit rates operating about materially different. profit that just

industry If the leveraging we're improvement. ongoing you in line, our echo the of unit plus, expansion XX% note, opportunity terms see any you'll past I'm that. and top that to just Jeff's of it's that's ongoing the through But for bottom one to going great of see things, sure It's very with to major of G&A. bests. happy our go and be And

Todd Brooks

all. you Thank Great.

Benjamin Porten

Todd. Thanks,

Jimmy Uba

you. Thank

Operator

is from a Please follow-up Long Joshua with question. question your Stephens. question with next Our proceed

Joshua Long

Great. I was were looks remodels the your squeezing quarter follow-up. during older of like a curious, maybe the it just Thanks units. in me for couple maybe some for there of

a that maybe curious or in bit if Just is the – a remodel works. or a one-off more opportunity was something comprehensive one-off

that looking up your at and/or – think market? set curious those, you was California going touching for what I of in and on either Just some it back learned by

Benjamin Porten

He's the unique IPO, he who the a So guy he worked famous as logo. designer. but and updated who design the update west, he's did well. known time our the actually is developed of parent with company interior It's logo our did the the guy an new very what at probably best for

caught after on since we're And maybe only those $XXX,XXX. so we've average $XXX,XXX been XXXX. XXXX, those cost six We doing But updates They left. have up. six, to

Joshua Long

you. Thank Great.

Jimmy Uba

Thanks.

Operator

question-and-answer your That That conference. concludes participation. also our session. you concludes our for Thank

You may have a wonderful time, this day. at disconnect your and lines

Kura Sushi USA (KRUS) 4 Apr 232023 Q2 Earnings call transcript