Kura Sushi USA (KRUS) 6 Jul 232023 Q3 Earnings call transcript

Company Profile

Participants

Benjamin Porten	SVP, IR & System Development
Jimmy Uba	President & CEO
Jeff Uttz	CFO
Jon Tower	Citigroup
Joshua Long	Stephens
Sharon Zackfia	William Blair
Todd Brooks	Benchmark Company
Mark Smith	Lake Street Capital
George Kelly	ROTH MKM
Jack Cole	Craig-Hallum Capital Group

Call transcript

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Operator

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

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

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

Benjamin Porten

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

Litigation our Before Act forward-looking These are will begin on that forward-looking not of part not need our statements future performance, reliance undue guarantees formal should we them. Securities to you include remind under everyone and Reform remarks, I put defined therefore statements XXXX. today discussion as of of Private the

also actual more of impact condition. uncertainties our operating subject of refer future and all filings to you risks differ These that risks the financial we discussion We results our what a for to statements from SEC results and are expect. numerous cause detailed to could could that materially

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

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

Jimmy Uba

driven I'm in Year-over-year our another quarter to aggressive trends. growth restaurant-level and terms you industry-leading for grown XX%, and Kura and unit by initiatives. today. Ben, thank for announce both sales everyone excellent has approximately corporate joining comparable of performance by Sushi, revenue to Thanks, pleased us

I’m expands footprint exceptionally efforts to a over prior Sushi towards Kura proud of improvement strides well. continue leveraging as takes year, XXX to fruit, mature profitability. bear its continue it the and G&A basis points as see Our to greater as with an company

quarter [indiscernible] dining Third breaks XX.X%, mix. lead traffic $XX.X traffic down in continued the and with of sales averages comparable with growth revenue or to which and our price third by casual to basis was industry industry X.X% outperforming XXX quarter points. X% million,

performance $XX.X million the comps June total of XX.X%. better of even has been sales with and

that sold of As which in results pressures to [indiscernible] for saw the remains sales best, The percentage these we line our year Kura ease with XXXX. guests in fiscal as in we a extremely coming at earlier time goods all of demonstrate, cost strong. fiscal in continued XX%, saw inflationary with is

of cost improvement year. percentage were of the sales Labor a XXX XX.X% as an basis points prior over representing

represents improvement over of operating Our margin third an the XXX quarter points year. restaurant-level basis XX.X% prior profit of

basis I'm restaurant-level profit points. XXX happy and basis between G&A, our adjusted under prior note margin margin EBITDA our also to over able by the net very points to the by year XXX operating that margin our grow income we growth in in were improvements

subsequent we opened restaurants restaurant seven quarter during new new more QX, in fiscal During to-date end Georgia opened the Massachusetts of new a restaurant to one year. one total and for Buford, Framingham, the

as construction, We have produces seven (ph). executed units XX under well as more

couldn't our have We fiscal ‘XX. growth showed fiscal be we an with for unit goals achieve up to position pipeline, for are and the excellent happier in ‘XX

out Our been new rolled Waitlist entire successfully app our system. restaurant have across

June. exceptional of this to further traffic, we on the data we more us is its it's encouraged too accurate why early Wait While quantitative to in we've our believe, is which underlined of and terms in provide seen impact, results. very by peers meaningfully continue for (ph) times by are outperform early part are we performance

membership revised approximately course to new of continued with over XXX,XXX the members, grow quarter. the Our

driver Cartoon April some expectations current program campaign has we've exceeded great Demon May, of has of set to improved again, Bears, our amazing comp the success delivered our a guest restaurants and Network be another which and Our television and far responses collaboration our held on any with initial our and collaboration for Slayer during We Bare up journey. strongest seen

of updates to to our reflects concurrently. to X, July of inflationary As would took quarter, most final in on confidence partially lapped pricing seen like effective event modest we pressures the X, recent the was fiscal bringing lapped scale on this repricing I pricing approximately year. quarter which of X% earlier in by We the a Relatively our for note, March offset XX%. some provide Subsequent on that pricing of we our pricing X% fiscal X% pricing. of third normalization

Lastly, restaurants at our like corporate appreciation would deep my by share both I and amazing center. the work our to for Thank you, employees everyone. support

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

Jeff Uttz

Jimmy. Thanks,

prior total $XX $XX.X sales in as third million in compared XX.X% positive quarter, as the sales For in Comparable to was period compared California and X% with were XX.X% period. of year year comps prior to the the performance million Texas. restaurant regional

Turning of during to in sales began costs that has curve continued year see the We're quarter the second seeing. to to trends prior in hold as be encouraged we flattening our very inflation costs. the that we percentage Food were XX.X% as continue are a to the XX% that compared pleased and beverage and of quarter. to

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

cost of general sales inflation. as prior increase X.X% related to due X.X%. a XX.X% to were in quarter's increased expenses XX.X% the to costs a quarter in sales the as percentage and year of as percentage Occupancy prior to compared costs year as Other compared marketing well an

in to administrative quarter. G&A General compared as to in million year million basis, sales dollar were expenses the of $X a decreased quarter. On percentage a and expenses the as year $X.X as prior prior XX.X% to XX.X% compared

leveraging in year. last our the calls, been focus has a main several mentioned ours line we've As this of G&A

our The XX.X% quarter-over-quarter against million with this of XX%. of forward and in a an we as focus increase making continue as sure construction will necessary continue pleased make approximately of of operations level revenue hires main key growth, keep we and a that departments. $X.X leverage increase going aggressive while very to increase our the We're represents to such fuel this our in to

as of Operating income to income compared prior in million operating $X.X $X.X the million year was quarter.

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

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

closed of due no Turning cash April the $XX.X now to At million cash in third we our balance year. offering, is to we equivalents our cash cash fiscal this increase and our in quarter, This in follow-on the large which debt. and the end and liquidity. had of

XXXX. I fiscal Lastly, update the and to following want reiterate guidance year for

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

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

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

current the call, In performance. conclusion addition, as our year, we mentioned quarter with longer previous earnings our during of first fiscal no quantify at quarter-to-date calls, beginning will the earnings

call to And with that, back I'd turn like to Jimmy. over the

Jimmy Uba

remarks. concludes This Jeff. our prepared Thanks,

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

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

Operator

you. Thank

now conducting a from question [Operator your be question. comes first Our Jon will Citigroup. proceed question-and-answer session. with We with Please Tower Instructions]

Jon Tower

for Great. questions. the taking Thanks

at you attribute could to that -- activity said in quarter-to-date. apologize Just dig promotional promotion that most bit for not primarily that that's do anticipate intact? you the following But you the you on the comps stay quarter-to-date, the long the of and air a Do how attribute curious, little XX.X% you moment. I to if exactly to believe and I promotion on promo would that

Jimmy Uba

question. me answer allow for in Please do your you to you, Thank Ben, your translate? to first Japanese. question Jon, want

[Foreign Language]

pleased up with all part We're period. [Interpreted] with team And in results extremely are mentioned it's collaboration. with a it's our we've that definitely that Yeah. two-month this meaningful played did us Bears, of over -- XX.X% We campaigns amazing Bare comps -- an marketing our very setting a the job with

end the began to Bare Bear So We June of Bears. with going through We Bare and go July we're for in

month. (ph) that campaigns exciting The is the month typically seen the the Demon is in greater we've second first historical pattern for than

relatively expectations We And but July’s are pleased. so (ph), tempered enthusiasm versus We're impact first certainly the of for week our help. July, the Demons Bare for very Bears

Jon Tower

DC And for that I correct? believe in that on you continue thinking, hitting line had kind of promotion -- still planned I'm Great. to is Comics just of August, a with track if

Jimmy Uba

is had nationally of glad up one very [indiscernible], Bears excited it's I'm brands, sort to Yeah, brands. those August. anybody DC. If known absolutely. And of put of our first we another We DC about one being Bare we're again American that

Jon Tower

looking on surprised at just I'm on was then in year-over-year per inflation operating the cost considering, basis see just that some And a the model actually I seeing. of the to you're I was week, it Okay. go down and labor assuming

in therefore, that? year's and about of third of How to what we sales and funky think should -- So combination perhaps rolling the the through technology drivers just that? can speak we last were leverage quarter the sustainability a trend system this forward? Anything behind about you or the moving talking are

Jimmy Uba

[Foreign Language]

[Interpreted] Yeah.

or labor right, leverage. year-over-year, sales would factors, So driving the cost be looking the driving three factors at performance two one you're

of initiatives. QX rollout our The completed be We at of other of end the year. three would last the effectiveness

robots, a And only partial benefit in benefit so the whereas had preceding the had this from for quarter we server full year. the we year,

management our executing really COO's that And operationsm, team operations They of one our store store top and the management. others, been their they’ve labor made and that. or priorities, taken on

very in for we’ve we’re QX. with so And pleased where come

against sustainability provide because comparisons. to of more we we’ll basis, a would go-forward like on terms up fiscal some In be coming some context

leverage points like a in QX anything expect from not seen of that. XXX QX, of QX, always to and the historically, degree certainly range do we leverage, we’ve but or Looking basis

live the so being been The first for from in have, three months, and cost perspective. factor full XX a they’ve baked initiatives that they’re

we in to that’s probably pretty QX while don’t close opposed we to think basically, we year way just is is and to expect do a sales had at sales, the as in was as bonus QX, points and leveraging basis adjustment of year QX of QX labor going get look to this it at other QX’s in that fiscal of which The so ’XX we this quarter-over-quarter to expect a triangulate percentage trying stepdown to in (ph). QX you the from look ‘XX that

Jon Tower

I’ll All it right. Thanks lot. pass a along.

Benjamin Porten

Jon. Thanks,

Jimmy Uba

Thank you, Jon.

Operator

you. Thank

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

Joshua Long

range, just and additional comp California transformed for you we started the left off if maybe Great. trends any numbers could then could that through called overall taking about Thank quarter sort with XX% very double-digit, the I my strong. well? that I through Texas was there's the things share region last of quarter, color you in how if curious Curious by as questions. and some off out you quarter. the of as you low on talk know

Jimmy Uba

Language] [Foreign

Yeah. [Interpreted]

-- we Jeff on so at for the that's becomes but comparison California looking basis, multiyear Texas output regional a for comps single the premium years, the a can mentioned determine a comparison, operating have much So If the this two, especially just simply three do for closer remarks, year-over-year year opening your in comparison Texas the basis. quarter, as because the comparison answer. last radically really been different, environment the California and for

nice then May the with was weaker, June think saw saw, April which us. in pleased what a restaurant little In strong. terms June for bit that was June was more we with I pretty stronger cadence is of and XX.X% March It's traffic. yeah, actually, strong a we very industry, is the performance, the been of everybody

Texas conferences important I Josh, units three too, think, Jersey. New that Washington in we've in note our and well And State best this mentioned what's is, in are as and to

versa. region that pretty So better We're every while we dispersed do best country. see maybe and pleased our very happy some well regions, in vice are and the throughout California, three restaurants certain very than Texas, quarters geographically continue much to very to and

Joshua Long

two then the pretty known thinking from consumption, mentioned When talked frequently? think a And in being in pulling to appreciate about per widely in the you or pulling first quarters, how you frequent think you trying about more consistent about through think a consumption have trended also about of are Bare into your points. How here helpful. plate most the of We super the going past -- you I Are that? think American or perspective in been plate That's I in your terms per America. And you about has do we've kind how guests new trends, comics. DC marketing couple more the current does guest, XQ? guests Bears of, this

Jimmy Uba

[Foreign Language]

has [Interpreted] flat. we Looking much at consumer and Check check sentiment, being has per pretty been negligible. plate management minimal, consumption --

we it one over quarter, about XXX,XXX the is about so Bears, Bare rewards that We thinking members. for impact the of we're last of that, ways redeemed the terms In

working And properties. we've American for all of been with QX,

Bare for two first months and of Comics month the DC Bears We for last August. then the So

to our box. so strategic certainly, is tool materially put be that this the And Board's would our into quarters. we something much past than ability seen larger a And in attract we've members number

Yeah.

prices, one between register the collaboration brand strong a better (ph), pretty need a So the of to the cetera., as a with to et get sign-ups T-shirts, effectiveness see you the -- because Canister giveaway correlation member. to we the

be and the strong that certainly collaborations. a so ways fuel And of that collaboration, of determinating membership the these can brand growth will effectiveness we're one

Joshua Long

in One the we When efforts. then hop last about Great. of think kind queue. and the That's I'll marketing one helpful. back me for very quick

again, about I think talked accessibility you've versus adding dollars drive to and then prior optimizing more awareness to it's been the in opportunity optimize managing about the calls, current pipeline. your to and the marketing spend

Can sounds stepping that and terms commentary of some of numbers that you up, terms should square brand is against the visibility? of the it spend of think in progress the kind we you XQ just that how had kind kind reported marketing about of in off then awareness driving the marketing dynamic like, you or of optimizing that initiatives a one-time overall XQ and our with and

Jimmy Uba

Language] [Foreign

line, being Josh, cost may it I to XX points, the in XX the wasn't what the basis other So where referring comment costs basis really, mentioned marketing are costs be is think [Interpreted] points, meaningful. really drivers. what we by the you're But marketing incremental

the that's calls, dollars. new really As you the mentioned in the [Technical reallocation of advertising past Difficulty] earnings a just channels, Google's particularly marketing been many strategies, targeted marketing

seen We dollars And the pleased. as two we've with in exceptionally the last been effectively. quarters, our marketing are very traffic performance, think particularly moving we've

in And so near – terms that anything big any marketing of time yeah, or we in in don’t future like expect step-up the in spend future. a

performance. We’re the very with pleased

Joshua Long

very Thanks time. for Understood. much the

Jimmy Uba

Thanks, Josh.

Operator

Thank you.

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

Sharon Zackfia

opened Hi. fourth know touch you've to a Good the because I comfortable is five so the one that and status development still new afternoon. higher I where know I battling openings. for the wanted implied it's lower wide end quarter, on between three more on. to range so anywhere And of you kind pretty are and everyone's of end? permitting I guess, or mean delays been I construction? at far.

So your curious that? end maybe comfort on is kind I'm just where the of higher level hitting of

Jimmy Uba

[Foreign Language]

most in the with. far [Interpreted] of shared, construction the and mentioned, construction that pretty seven comfortable along we we the units we're nine extremely half. XX under Of that So are number they're them back

moment and that of not hitting outside so And end higher certainly the possibility.

confident to remainder quality unprecedented would of yeah, pipeline the hit so really take we're about to I'd very of for -- end, delays sort say think, our a the It lot is the us quarter. lower I unlikely. of For the have and

that first And in XX, we're nine the in already units number confident of very that to so we're of the week July.

impact And the of less. it's units can of month revenue, impact the kind 'XX subsequent so in beyond of have that the order fiscal terms of a or

guidance in. revenue being And that so super But that's baked be said, that substantial. going not to our had

terms shared pipeline, the the (ph). comfortable so numbers and unit with we guidance And we're with extremely both in discreet revenue that of

Sharon Zackfia

talked of And test manifest this curious quantify changes for builds way to kind that. kind time is you've that. longer, that know, had benefit positive. any late-night kind some pretty a kind being of that parts the then this to you day in over improvement with if the locations of of Waitlist something the you that or algorithm, I'm is where and a and/or lunch quickly? for as there's June, about a I And Thanks

Jimmy Uba

Yeah.

So we a in to traffic it, -- learning expectations. the that takes in build terms and for period the algorithm QX sort just six quantifying use rollout it finished of where of week its in there's

And so or to bit -- expectations. little to build because provide low numerical a we're numbers

second is terms over does of In question, build really I what interesting -- impact your the time? think, about,

discussing that been app with And guests. communicating is that we the out necessarily is these we've rolled one improvements our marketing thing department that waitlist updates, these to about really to

And I I the but app let behavior marketing guest change know so they that in experience concerted that build don't actually schedule so has improved, a imagine their will our there been improvement that has it. material -- around think a improved, guest there's has there the accuracy and guest Waitlist can effort -- until

rollout going update one. we're existing from new to And app, It's working the look to that new the of skin. which finished to so the we different on now is Waitlist have rewards our completely going the a program,

the wasn't really just And The with to come apps. bundle that so launch. is going app that great. can say of the app communication idea rollout now, new to as great is the I we're really the

Jeff Uttz

some it or to have an do wait new by and single know X.X what on been that’s their do the is of more quantify or over more range or of while know now wait underquoting of in restaurants, we the more where And – down substantially times are information to hour able decreased in could we accurate. we in have hour do sales have digits. or Waitlist restaurants people And yet And the our the misquoted that the we app. Sharon, people we we XX% into being most to comps, know that But the times. half means by the has quoting don't to XX% be also, that of data terms

Sharon Zackfia

Great. Thank you.

Operator

you. Thank

Please question. Company. question with Our comes your with next Brooks Benchmark from Todd proceed

Todd Brooks

questions. my the coming taking for guidance are Thanks -- improvement, the quarter. But ask of Hey. this I the where very year in you strong provided Obviously, for performance is about years, forward in there as the your to that look G&A Jeff, 'XX? out fiscal as know wanted we and full to one went And far priorities of I is to most range. attacking as after have opportunity starting at efficiency we're or for you opportunity. look efforts efficiency as completed this you more

Jeff Uttz

There efficiencies. opportunities more for are our

One daily is talked things have for support financial being the that some tools of about planning forecasting that do. recently our and the a what's analysis but improve P&Ls. first determine not we things in that and research one also leverage to things FP&A department, budgeting, restaurants their able we're our in going only the software our for on in more past with was support substantially, the our the new we center, technology we some of to I did We on of the -- the actually in launching will

dig in into do? very with last XXX stepped happen person QX really think exceeded that Very, taken. IT effort to has help that. on that a own single the us XXX What other you. leverage pleased financials deep really in happy an and not quarters, make very operators and entire the just effort. them. the to as It's to good how we've can going in company. up as because bps this able and Quite how support of order honestly, one be departments can I've I'm to their having bit help Not in very a with a team it's saw their asked my happy this well give we about is We And to the step expectations two company in the quarter. technological our center tool little

recruiting, areas And our in in so months what order we're to But we hires asked support to did that. of slowed the in such do where really the to to to keep a to down people do this minimum. training going bit hires nine has what and year the hire our they the growth continuing support development, center, we as to construction, little we've past kind can a continue need at for

why leverage. we such good So saw that's

leverage forward. I are on percentages. haven't continue Wednesday provided in see to going single-digit any We guidance will going to be

next the but we leverage not over We will XX in necessarily get that's two with XX seen months, or months but very the the there last happy that someday, are we've quarters.

Todd Brooks

follow-up Actually, a And may. the on if side. question great. pricing I quick question, a That's

the So of about We the way I that heard waterfall lapped X% at the same talking quarter. July, time, X%. took XX% but was the I another at we think guys start you during the

of the the think we my running effective about what there. price? kind months maybe Is right two math So back quarter, is XX% of it

Jeff Uttz

say, Well, in going we're I a see there X% and was X% you'll is, that June. the there's for what to

X% we QX, for and took took will on X%, So we July X% so as each the July months. off X%. be -- to pricing we for mentioned, but of rolled see August in we X, and And you'll those X% the

X% So August. XX% and June, July

Todd Brooks

And is. Thanks. my final Perfect. one

Jeff Uttz

and sorry. I'm I'm X% sorry, July June; August. XX%,

Todd Brooks

Thanks. Okay.

Jeff Uttz

just we It's X%, December X% took. and for at

Todd Brooks

landlord $XX the growing hires We'll team year. now the thinking in But balance uptick brand and the I that the then XX accelerate of projects two to cash to grow. the opportunity any opportunities know the I on would you And make unit Kura for after about, readiness and about into you're has has appetite guess, talked in offering. to of cash the enough. or incremental Fair the talked the in the magnitude coming sheet the brand's organization as that need we're to the the listen, I final openings? performance, any get think the faster to one, we on million of like grow. see balance you just between if know capital the the open the do leases U.S. for signed sheet, already building

Jimmy Uba

[Foreign Language]

similar pace we of past in in growth But So our really unit free very gating terms what calls. about is [Interpreted] factors. to said this way we the is that earnings think

First would be our liquidity.

would second third our availability And the would The be be pipeline. management sites. of high-quality the

As rates, in you mentioned, we've cash in ever and our the great. April with the -- with we're sites are position the been best

And so -- for breadth to really the goals. is last several years, sure the up focus our has management quality the pipeline keep really the with been on and making [indiscernible] of

to we've of we that. midpoint And historically think that [indiscernible] our what year guidance actually, what went year is XX%. when so is said tended is XX%, street the we XX% did what And XX% before this public. We we we -- is outperform

neighborhood that number the we to that's comfortable deliver. that's we think with so we're continue can And the and of that that neighborhood

going additional by is of a number that markets of past terms pains that in thing sheer through up just that mentioned regional manager not calls earnings in. other building regional a of in new growing We're teams, terms management region. One in we're we've -- on

once three, get that you four become unit unit ability so to become self-sustain. two, single And of markets, then infills markets sort these

percentage units change, doesn't materially at you number years, number that's five the grows opportunity. with year. that But putting the of another And last so if been look as the out a over just even every number, if our we've growth regardless

our very with growth. we're And so quick

Jeff Uttz

eliminated sheet, to bottleneck want sure to for mentioned, potential eliminate to make hiring it question of while. of going, it cash, million we the side, ties as managers. cash just the asked. And that a potential any back full you growth recruiting Todd, to as continuing bottleneck we're for you we're kind trajectory all about potential with keep eliminating a $XX we serve why invest balance cash be G&A money as with That's going to that relates on to into the And invest in because the bottlenecks. set recruiting we we've it's then But to continue

that well So very to of up pace. we're shored terms forward keep development in going

Todd Brooks

Perfect. Thank all. you

Jimmy Uba

Todd. Thanks,

Operator

you. Thank

comes question Please Smith proceed next with with question. Our from Lake your Street Mark Capital.

Mark Smith

bit. TI up estate and guys. any to change development kind additional want of deals you're little insights seeing you're dollars on follow I deals a looking days availability that just Any Hi, on in these in question what of the at? real

Jimmy Uba

Language] [Foreign

the developers to the if mall biggest they can and shift just quite going [Interpreted] than they're smaller really developers, bigger developer. Strip a developers. national be have And dollars be especially -- lot their would really national So a Mom from mall Pop whatever large, TI is

And seen of necessarily our don't I we're It's more but just take. cycle. a of that's structural that trends different we've that's position so change, reflective in think that anything economic a or growth like that. in,

Mark Smith

kind of Okay. then wanted out. to And look further just

driving You a guys did good job margins here.

maybe the we back-of-the-house that that initiatives other restaurant You've as updates you things like or technology, some maybe you any got down drivers that, road? improve on some that dish some margin could like margin bit, that help be initiatives can that talked about forward? a washing have little Any look

Benjamin Porten

case. the always That's absolutely. There's Yeah.

actually thing in our dish pleased so that pipeline. we of that very have -- And terms most in initiatives. in single I'm these say the I'm is to now exciting washer, that of the charge

trying I've only United the one physical got in you've a beginning so, Right yeah, actually neck strangle. to And to in we're that, parallel. Japan. hands been But approval restaurant in testing in no, get States now, Pending extremely on. we're the

out. to on this And roll so it's moment unfortunately, for impossible line a to time a give me

than would the be initiatives year. we greater that out last the rolled impact three the dishwasher But alone from

something the this And probably in upside part focused new Keeping is tremendous. other so material a mind we're the on. would restaurants, but be it is, impact is limited the is that I'm change, margin growth extremely concept. more -- about with a such But to that

revenue XX% in by against And remarks, mentioned our grew by Jeff so as growing opening G&A his XX%.

do And to best I get really my leveraging. in deliver incremental margin improvements, of to but can meat restaurant so the story is the

Mark Smith

Okay. Maybe in. more squeeze one I'll

You've labor. retention about last any seeing Are months? over difference couple in here bit you guys talked the quite rates of a

Jimmy Uba

[Foreign Language]

that States. think our us to provide probably in for pride home dining averages compensation because for we we of than really point we the the and did a entire been United restaurants. work always outperformed take much it's is it's pretty the great place We So casual own turnover of industry [Interpreted] highest a

I with to can to our a are new compare lot a But it's in with being -- Sushi with you relatively people of concept efficiencies. tips just States, United markets. revolving think the familiar hard the new really being most get

that's States. a state, we only just as there's I candidate meeting is instance, management it we trading average know for earlier, given greater getting So industry We a our where growing United outside position, easier their And home of we're we're attrition in happy pain are current for mentioned already that. as with for us. really our if very infill so with But us we're and the this retention. that the associated

Mark Smith

Thanks a lot. Thank you, guys.

Benjamin Porten

Mark. Thank,

Operator

you. Thank

with George comes Our Please from question next with proceed MKM. ROTH your Kelly question.

George Kelly

everybody. Thanks taking Hi, questions. my for

for much us the drove? that. that, a on dishwasher, from just bigger were said going Can that three the the should one have you three your alone first -- excitement through those you initiatives you impact So year. around initiatives savings remind quantify they and just how and back than to Ben, Curious, you last

Benjamin Porten

Yeah.

orders. the the the initiatives call, is three the to touch servers, three to referring payments (ph) a the and the reminder on panel people and other as -- robot So we're table-side

three labor from And more are initiatives. XX points basis basis be that. those Our improvement confident meaningful than XX the about expectation to dishwasher, would points is we in

George Kelly

then sorry, interrupted. And That's I Okay. great. --

Jimmy Uba

Language] [Foreign

robotic washers Cascade -- on we [Interpreted] go-forward will it restaurants, existing mind of Keeping put servers it's in, all a in the the our the to because when not be that on basis. going just probably we get dish robot into from impact put

like they're you're improvement. to the the highest as or It be see eligible dish And washers a among the high in mentioned state not will the so not light a back-of-the-house switch. because tips. we position for position they're steady going But actually paid before,

eligible not other DOL job. position technically given has approval tips conveyor through so are it's that our they're growing one the The guests -- a employees physically us belts serving for -- and the for

workload dealing being remaining the will to materially better sort and and able expensive than remaining automate position even will it's what of make -- an this -- easier less And them they're their person, turnover high it now. so with for workload, for be with the the

be people And will level. it. the have benefits, that. G&A we to recruiting level for just the where focus be so on constantly and like replacing the really I'm excited restaurant It it don't Yes, stuff won't at and

George Kelly

of great. historically. I between really been year? a And if That's this number. such just at I anything step-up your think historically for that I'm again margin, then of that would nice there's look make seasonality I And step restaurant of level and you a you reported XQ hard should just be that me. If achieve curious kind just up aware a question XQ line, for to the there's Okay. strong it

Jeff Uttz

biggest the thing, from this think touched we I Well, already to got a on in look George, at Jimmy was year jump you last big labor. such when QX, QX

It place. that where the year initiatives was we first was the and QX last everything of For in in fully last place between QX. put year because quarter

we between two of a benefit quarters. So lot those got

in compensation year an this took have going addition, we incentive last both of which in not QX year. benefits adjustment we're to In those

very last to you think careful line. a if kind to specifically I I in that look of eye the consistent you've where historically be jump it's seen QX of on. lines, assume QX year, pretty probably keep your the other from in with would terms So labor that What

George Kelly

you've the last Great. you thought TAM about was Is a just IPO for but did the that you're updating on? something talked study I about Okay. discussion was there recently, remember believe then that this maybe realistic That’s part guys there don't helpful. question I of as And And then me. a of still goal? number working that that. was units you about process,

Jeff Uttz

It's space -- XXX. don't a sort certainly against not of that about new initial of white still XX We're one. -- got we've we units the It's very have it. estimate

not And update it. so rush we're necessarily in to a

and think is this that the in biggest One of mass really but since us, when I the that of we've for closures it's Japanese the things seen it's gone our exploring is public trickier we've restaurants. unfortunate, -- opportunity estimation,

And competitive focus as white to to studies on factors. space opposed demographics more tend

last that used And levels we very we a sales that IPO true at but that's much, landscape we just what how we And how has that figuring landscape below. when the know And that the to where conservative. are. are used did haven't the that's make study. tricky are we in meaningfully know that bake study money part we has whitespace TAM so the in out is changed the and do we're that parameters we the do so at the completely demographics the because changed -- very good competitive changed

some going set at update everybody So like from most white we I we do point, IPO, so we for that number we've the much when us we higher study believe next about think their if analysts this of that just years XXX redo for for or provide all conferences is will, even it summer. some on five and own But and know lower which fortunately, to us. seems as companies us, be would space be than we that, numbers call and parameters, at that their

And so a give new to one. had we haven't

George Kelly

you. keep guessing. Thank I’ll

Jeff Uttz

George. Thanks,

Operator

Thank you.

comes question with Please proceed Jeremy next Capital Craig Hallum your Our Halan Group. question. from with

Jack Cole

Thanks, for on Congrats Jeremy. guys. the is Jack quarter. Cole on This great

the magnitude about into wage how So 'XX? are you high-single think just wages that of Could Is pressure heading that in digits? just up you QX? still do And up year-over-year. then pressure mentioned we still FY clarify wage

Jimmy Uba

Language] [Foreign

labor the about inflation to seen little last what I was a for seen So we've we largely We've QX. quarter, that's [Interpreted] that year-over-year case the in and mentioned of bit XX% easing. think our

where say than lot a we've really I'd lot last than take that -- lower so that's being we we've the in which we what taken took labor. to is confidence to are we where happy of expect yes, mid-single going. going But of digits, our And terms our in with and pricing low-single cover. yes, or very speaks to land things X.X over the historically digits historically a And our we're what to COGS it's closer taken, I of years, what pricing reflected labor think period

Jack Cole

helpful. related seven pipeline under mentioned under what in then Got And active like I of it. terms does unit development construction. units to leases think you the construction? the executed versus again, That's look

leases. just of could number the executed And clarify us that? then So you provide

Jimmy Uba

[Foreign Language]

Yeah. [Interpreted]

-- we've back LOIs. phases. under be the executed being We've units -- expect got under been construction, of in seven construction double, executed it's we the most now XX them quadruple to number any and and XX got their are triple, have leases So day that a leases half of of number that

with pipeline. is the happy We're And yeah, the pipeline so great. very

Jack Cole

you. Thank it. from all me. That’s Got

Jimmy Uba

Jack. Thanks,

Operator

you. Thank

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

Joshua Long

for Thanks environment, see into dig Great. specifically food the taking in we Wanted the could to follow-up. inflationary if the basket.

and prior I of like You is in line in had expected But an the back we opportunity. talked about hoped we sort about here in half had talked the back think how of that coming quarters, year.

terms had you with all salmon the some an You an around shrimp other of if Curious or contracting there. talked proteins. key us about give could sourcing, maybe of and opportunity in some update

And term ship partner. a Jeff, plate the of was on maybe broadline for, initiatives the point, to was then, longer one I to other distribution ability some that know the a at

you're of And how that have timing or thinking just if about and so if the potential? curious any, in any terms update of just maybe there, sort you

Jeff Uttz

an I Yeah. have update. do

about The do do six or piece broadliner about We'll really So a very better U.S. found we of it specialized get consolidation whatever. that, once that Cisco is what difficult the update moving we've the of get our talked that a as contracts hold in already Japanese had what our for to to use goes broadline position our food. we what talked we decided Foods. our because done much some or was such semi of we be very U.S. in products, consolidation or to in distribution year that hand-in-hand U.S. with in broadliner distributors, ingredients Japanese use to be underway. past, broadline consolidate some able a the the that project And on a we've which -- months is to we is for

that those, Japanese broadliners than use the to type since easier already it's go And for we the stuff. get them mainstream have

And we U.S. that have covered consolidating and make that, operations. Asian doing we're more we're specialty we're but to what we'll into get down already two that they be get. is we'll So doing have able that very are items companies to going used country are by Japanese the that cooking, entire in the hard suppliers importantly, sure to use,

be I in are months, our will in that the progress. we're And already that expect Many done. next doing so that's done. We've a of And process consolidated. SKUs already that several

to about cost inflation. environment decline the we seen, In QX, saw QX X% seen sold quarter-over-quarter ease. continue that terms of our inflationary that of to have We we've from in a goods

the seems out in a the we're line with And move positive as that to a that distributors the general So supply all as well little continues consolidation chain work the smoothing putting economy and into to direction. be the of bit.

seeing going working All favor, factors the are forward what we're happy is very line. on of in those we're COGS and our

Joshua Long

commentary. helpful super That's

is that basis? In the -- about terms up on that year-over-year XQ a understand of quarter-over-quarter. I that, kind frame thinking What X% was how that just inflation. would of we

Jeff Uttz

in is last we we range but quarter, easing. about what the it's most quarter, same last its as important What talked about us about was talked to

Joshua Long

questions then that came in that the your Understood. pieces of is one you're constrained. really not not earlier That's key it's super And about capital helpful. of one through

You've got great of a concept, lots opportunities. growth

importance capital the the side. You human mentioned of

if funnel either are that the that over bigger so overall of curious And And the quantify just that growth opportunities piece just could or approaching rate talk or pipeline? that like you're seems where are going time? talent, talent you that? into the manager about Because biggest develop is how to

Jimmy Uba

[Foreign Language]

we and have markets. mentioned to sort growth where majority what [Interpreted] back So yeah, but we earlier, of we're partner a this our concept, unique single unit of in units a unique goes are the

associated and have recruiting And pains we're HR. growing with going to and so naturally, training

compromise the earnings really our that's we that's that, the years most want our that's calls and we growth. also important been for know don't as theme of on why two the factor, gating be So to last

so And focused on. our efforts we've that's what really

saying that be to that enough ability is are. it's is the serious going When going simply want case we're is priorities. priority That's not this for this transparent What -- this, is our where top this grow. we seeing don't to the you when think like be -- discussing is compromise our this we're have What all. to at is a we're concern we really about to to

The American operations seeing and growth. our -- so everybody opportunities tremendous with other well, working thing is with America for that is

of expats are American Japanese want lot the a There join route. to (ph) that

and orders down pipeline internal our next of we've Japanese employees store promotions people -- us got internal pipeline there's in. the of I that position well. the last certainly that they position of hires really simple are yeah just a years from or dual call to -- have summarize, a external easy I banging that call then we so But tell wouldn't we're -- so be this because to and is a we're an American it the several And as -- over wouldn't examples tremendously want that in, but concerning employees, grown it

Joshua Long

just knowing no there's my when procure. an restaurants that clear, to understand. your part scale easy trying Totally concern on and to And there, to business, side, you're easy be especially from its do, hard

and Appreciate pipeline, the dual certainly encouraging. perspective and it's there appreciate color. on that triple the information So I the

Jimmy Uba

Of course.

Operator

Thank questions at no concludes This time. today's teleconference. further you. this There are

may lines your You you your participation. for Thank time. at this disconnect

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