Kura Sushi USA, Inc. Q4 FY2025 earnings call

• Strong restaurant openings: Fiscal 2025 saw a record 15 new locations added. • Adjusted EBITDA growth: Annual adjusted EBITDA grew over 30% due to successful management of corporate G&A expenses. • Q4 financials: Total sales $79.4M, comparable sales growth 0.2%, COGS and labor improvements. • Real estate updates: Closed fiscal 2025 with 3 store openings in Q4, 3 units opened post-quarter end, and 6 units under construction. • Rewards program: In process of introducing status tiers to the rewards program. • Reservation system: Revisions largely complete, expect to market to non-reward members in fiscal second quarter. • Robotic dishwasher: Secured commercial use certification, expect to retrofit ~50 existing restaurants, with labor improvements of ~50 basis points for retrofitted restaurants. • Unit expansion and efficiency: Honed unit expansion strategies and implemented new systems for lasting efficiency gains.

Total sales for the fiscal fourth quarter was $79.4 million. Comparable sales growth was 0.2%, led by traffic growth of 0.5% and partially offset by price and mix of negative 0.3%. Cost of goods sold as a percentage of sales was 28.4% compared to 28.5% in the prior year quarter. Labor as a percentage of sales improved by 30 basis points to 31.1% compared to 31.4% in the prior year period. The company added a record 15 new locations in fiscal 2025. In the fourth quarter, 3 stores were closed, and subsequent to quarter end, 3 units were opened. There are 6 units under construction, with expectations to open 5 to 6 units in the first half of fiscal 2026 and the remaining in the back half of the year.

• Fiscal 2026 total sales expected between $330 million and $334 million. • Expect to open 16 new units, maintaining an annual unit growth rate above 20% with average net capital expenditures per unit ~$2.5 million. • General and administrative expenses as a percentage of sales expected between 12% and 12.5%. • Full year restaurant-level operating profit margins expected approximately 18%.

• Volatile consumer environment and tariff pressures negatively impacting top line results and restaurant-level margins. • Ongoing labor inflation, though offset by operational initiatives, remains a concern. • Uncertainty with robotic dishwasher implementation timeline, as manufacturing and shipping from Japan pose bottlenecks. • Volatility in supplier negotiations and tariffs affecting cost of goods sold.

Q: Reservation system impact and learnings?

A: Ben Porten said it's hard to tease out impact, reservation system supported the quarter, and learnings include improving user experience for servers and guests.

Q: Guidance and impact of reward system/reservation?

A: Ben Porten said revenue guidance doesn't hinge on IP campaigns or reservation system, which are upside opportunities.

Q: Mix, comp expectations, customer profile, and IP partnerships?

A: Ben Porten discussed mix challenges due to consumer environment, no major demographic changes, and upcoming IP partnerships like Sanrio.