KURA SUSHI USA, INC. Q4 FY2024 earnings call

• Development: Opened 1 new unit in Q4, 14 total in fiscal year; 5 opened in Q2 2025, 6 under construction, with remaining 9 backloaded to Q3/Q4. - New initiatives: Full rollout of back-of-house streamlining in early September, reservation/self-seating system porting proceeding, diversified marketing efforts prioritizing quality IP collaborations. - Impairment charge: $1.6 million due to challenging sales environment at a Florida location.

For the fiscal fourth quarter, total sales were $66 million with comparable sales performance of negative 3.1%. Cost of goods sold as a percentage of sales was 28.5%, a 100 basis point improvement year-over-year. Labor as a percentage of sales was 31.1%, a 230 basis point increase year-over-year due to wage inflation and sales. Restaurant-level operating profit margin for the fourth quarter was 20.9% compared to 24.4% prior year. Regional comps showed positive 3.9% in the West Coast market and negative 8.9% in the Southwest market.

Expect total sales for fiscal year 2025 to be between $275 million. Expect to open 14 units, maintaining an annual unit growth rate above 20% with average net capital expenditures per unit of approximately $2.5 million, and expect general and administrative expenses as a percentage of sales to be approximately 13.5%.

• Macro environment uncertainty affecting sales. - Site selection and strategic considerations in unit development. - Utilities and other costs being somewhat out of management's control. - Litigation expenses related to wage and hour claims.

Q: John Tower of Citi asked about guidance for revenue and new store openings, and pricing.

A: Hajime Jimmy Uba discussed conservative revenue guidance due to macro uncertainty, focus on cash on cash return for new stores, and upcoming pricing in late calendar year.

Q: Jeff Bernstein of Barclays asked about development pipeline and commodities.

A: Hajime Jimmy Uba said no issues with permitting/construction, focus on site selection; Jeff Uttz discussed commodity inflation assumptions and cost control in other costs.

Q: Brian Mullen of Piper Sandler asked about restaurant-level margin range and technology initiatives.

A: Hajime Jimmy Uba stated expectation to maintain margin above 20%, and discussed timing of reservation/self-seating system impact on labor costs.

Q: Jeremy Hamblin of Craig Hallum Capital Group asked about other operating costs and technology initiatives.

A: Jeff Uttz and Hajime Jimmy Uba discussed other costs control and timing of reservation system implementation.

Q: Sharon Zackfia of William Blair asked about sales slump causes and marketing initiatives.

A: Hajime Jimmy Uba discussed macro factors and IP collaboration impact, and Ben Porten discussed timing of reservation system impact on bottom line vs reinvestment.

Q: Todd Brooks of Benchmark Company asked about regional same-store sales and marketing collaborations.

A: Hajime Jimmy Uba discussed regional comps and shift to quality IP collaborations; Jeff Uttz discussed marketing mix evolution.

Q: Jim Sander of Northcoast Research asked about G&A spending and DoorDash mix.

A: Jeff Uttz discussed G&A leverage and DoorDash mix and pricing.