KURA SUSHI USA, INC. Q1 FY2025 earnings call

• Strong Q1 results with 1.8% comps and 6 new unit openings; EBITDA margin 5.5% (210 basis point improvement year over year).
• Successful One Piece and Pikmin IP collaboration campaigns supported Q1 comps; no IP collaborations planned for Q2, focusing on food-focused marketing.
• Technological initiatives: New reservation and self-seating system testing in February, Mister Fresh 3.0 rollout in February, Mister Fresh 2.0 US rollout in February.
• Development: 6 new units opened in Q1, with 6 under construction, expecting back-half weighted openings; Bakersfield, CA as a critical test market in a smaller DMA boosts confidence in smaller high-potential markets.

Total sales for the fiscal first quarter were $64.5 million. Comparable sales growth was 1.8%, driven by a 4.1% mix offset by 3.3% negative traffic. Cost of goods sold as a percentage of sales improved by 80 basis points to 29%. Labor as a percentage of sales increased to 32.9% from 31.9% due to wage inflation and high labor cost markets, partially offset by operational streamlining. Net operating profit margin was 18.3% vs. 19.5% prior year. Adjusted EBITDA was $3.6 million vs. $1.8 million prior year. In development, 6 new units were opened in the fiscal first quarter, with 6 under construction, expecting back-half weighted openings.

• Expect total sales between $275 million and $279 million for fiscal year 2025.
• Expect to open 14 units, maintaining annual unit growth above 20%, with average net capital expenditures per unit of approximately $2.5 million.
• Expect general and administrative expenses as a percentage of sales to be approximately 13.5%.

• Forward-looking statements not guaranteeing future performance, subject to risks and uncertainties.
• Risks associated with labor inflation, market competition, and operational challenges in new markets.

Q: Jeremy Hamblin asked about trends in comps, IP collaborations, and calendar shift impact.

A: Ben and Jimmy discussed IP collaboration timing, Q2 comp challenges, and calendar shift impact on results.

Q: Jeffrey Bernstein asked about cost side, labor inflation, and labor initiatives.

A: Ben discussed labor and COGS inflation expectations, labor initiative tracking.

Q: John Tower asked about pricing, leap day, and revenue guidance.

A: Ben discussed pricing adjustments, leap day impact, and revenue guidance conservatism.

Q: Brian Mullen asked about development and traffic.

A: Ben discussed site selection focus on cash-on-cash returns and traffic trends.

Q: Sharon Zackfia asked about mix sustainability and delivery.

A: Ben discussed mix sustainability and delivery being incremental.

Q: Mark Smith asked about G&A leverage and preopening expenses.

A: Ben discussed G&A leverage and preopening expense efficiencies.

Q: Jim Sanderson asked about mix promotions and traffic trend.

A: Ben discussed mix promotion impact and traffic trend improvement.

Q: George Kelly asked about Mister Fresh and reservation system.

A: Ben discussed Mister Fresh 3.0 and reservation system benefits.

Q: Todd Brooks asked about reservation system rollout and labor efficiency.

A: Ben discussed reservation system rollout timeline and labor efficiency improvements.